Tax Rebate and Injured Spouse

Q: What happens if my wife and I claim an "injured spouse" designation?  Will that affect the $1200 tax rebate?
Jerry

A: There are two background pieces to read.  First is my post on innocent/injured spouses.  The second is my post on the tax rebate.

An "injured spouse" is a joint-filing taxpayer who has their share of a tax refund garnished to pay back taxes or debt like student loans.  Filing an "injured spouse" claim allows the up-to-snuff spouse to isolate their share of the refund from the garnishment.

According to the Joint Committee on Taxation's technical description of the rebate:

Payment of the credit (or the check) is treated, for all purposes of the Code, as a payment of tax. Any resulting overpayment under this provision is subject to the refund offset provisions, such as those applicable to past-due child support...

That means that the rebate check (or the credit, if applied on the 2008 return) is subject to the garnishing rules.  That also means an injured spouse claim can be filed so that the injured spouse gets her share.  However, this must be done on the 2008 return (in Spring 2009), by claiming her half of the credit.