Student Loans So if your at the time wife had outstanding student loans 10 years ago the IRS can withhold return?

T

Texas6023

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Wife when filed taxes.

Did not know the person when student loans took place..

Even if you did not know that your wife existed when the outstanding student loans took place nor did you have any clue of debt in student loans the IRS can still withhold the outstanding debt and all the years of interest built up and not even be willing to cut you a break on interest accrued? Or here your situation out? I mean no one can take a big hit at any time financially and the least the government can do is work out a payment plan... Lots of lessons to be learned which is obvious but talk about cut throat..
 
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Sorry, no sympathy this time. This is the same whine heard from people who default on debts, suddenly get their wages garnished and complain "they won't work with me."

Wage garnishment and tax refund interception are the last resorts.

It means that the debtor has ignored every opportunity to make payments until the creditor has no other option than to reach down the debtor's throat and yank out the money.

Your wife HAD a payment plan a long time ago and and reneged on it. She's not entitled to a break.

Frankly, if you can afford to pay down your mortgage by $4000 per month, perhaps you should take care of her student loan debt as I suspect that those loans are carrying a much higher rate of interest.
 
Was asking a question for a buddy at work. Don't mix and match my other questions JACKASS!! I mean adjuster jack.

Just answer the question if you going to answer at all.
 
Texas6023 said:
Was asking a question for a buddy at work.
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Then say so.

Re-read your post. There is no way anybody can conclude that you weren't talking about your own problem.

The response you get here is only as good as the information you provide.

GIGO.

PS: Tell your buddy that he and his wife can reduce their tax withholding for the rest of the year so there is no refund to be intercepted.
 
Well next time I'll add some clarity since you ASSumed every question I ask is about me and in the past tense.. Some folks do like to prevent problems and learn from others mistakes. Not just your own mistakes.


Don't think he is worried about making changes to his w-4 because all the debt was paid off.

And I'll still keep paying my mortgage off instead of my buddy's wife's loan because I haven't seen what she looks like. And nothing's free in this world!! Amen?
 
From the initial post I get the following:

1. Federal student loan taken out by wife prior to marriage.
2. Wife has defaulted on the student loan.
3. Husband and wife are filing joint tax returns.
4. Joint tax returns show entitlement to a tax refund.
5. IRS, as collector for the USDE, has withheld the refund and turned it over to USDE.

Maybe a way to stop this in the future is to file separate returns. Just a suggestion.

As to the student loan itself, the borrower should try to get back on track. There are many options to review at the USDE's web site.

Des.
 
Thank you despritfreya. :).

In the past the returns were filed separately but because the wife didn't work. I actually had told him that he would get bigger tax breaks if he filed jointly but was unaware of lingering student pan debt. Maybe next year he can benefit from the joint return as this year the debt was paid off but in full which is a doozy for most..

My question now is if he had paid off loans with so much interest wouldn't he be able to atleast claim the student loan interest therefore refiling taxes or would he claim the interest next year?
 
Texas6023 said:
My question now is if he had paid off loans with so much interest wouldn't he be able to atleast claim the student loan interest therefore refiling taxes or would he claim the interest next year?
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Student loan interest may be deductible to some extent and it would be deductible for the year it is paid.

Show him the following page from the IRS:

Tax Topics - Topic 456 Student Loan Interest Deduction

If he paid off the loan in 2015 and didn't take the deduction he can file an amended return.

If he paid off the loan in 2016 he will have to wait and take the deduction off his 2016 return.
 
Texas6023 said:
Thank you despritfreya. :).

In the past the returns were filed separately but because the wife didn't work. I actually had told him that he would get bigger tax breaks if he filed jointly but was unaware of lingering student pan debt. Maybe next year he can benefit from the joint return as this year the debt was paid off but in full which is a doozy for most..

My question now is if he had paid off loans with so much interest wouldn't he be able to atleast claim the student loan interest therefore refiling taxes or would he claim the interest next year?
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Your buddy can contact the IRS and seek to claim "innocent spouse relief"!

Read all about it:

Publication 971 (10/2014), Innocent Spouse Relief


One little point of personal philosophy: The IRS shouldn't be used as a savings account.

It pays no interest.

The smartest play is to only allow the MINIMUM amount of money to be confiscated from your coffers.

Yes, THEY call them taxes.

I prefer to call it WEALTH CONFISCATION, and minimize my pain annually.
 
Roger, roger...

Thanks for info and I did call tax accountant and was told about spouse relief which was an option but I believe these folks trying to take care of the debt. But in some sort of monthly payment plan..

Come to find out this debt was from when wife was previously married and previous husband was supposed to have taken care of debt during divorce. So not even the wife was aware of anyone trying to contact her to collect debt..
 
Texas6023 said:
Roger, roger...

Thanks for info and I did call tax accountant and was told about spouse relief which was an option but I believe these folks trying to take care of the debt. But in some sort of monthly payment plan..

Come to find out this debt was from when wife was previously married and previous husband was supposed to have taken care of debt during divorce. So not even the wife was aware of anyone trying to contact her to collect debt..
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It doesn't matter when, how, or even with whom she acquired the alleged debt.

In fact, as you recite things, this just makes him much more of an innocent spouse.

You have made the case that will immediately, albeit grudgingly, take your pal out of her little predicament.

By the way, he won't need any service, CPA, attorney to argue "innocent spouse" on his behalf, mate.

In fact, you can ably assist him as he completes the form.

Your brief, pithy explanation does the job capably.

Ha can, of course, expound with more details, if necessary.

In this situation, a person with an IQ above 80 is more than capable of making the point that he or she is eligible for innocent spouse relief.

Get the form today, complete it by tomorrow, mail it on Monday.

Good luck, mate!
 
Ok. I passed info along. He wasn't against paying the debt. Just caught him by surprise when his return was withheld. But the federal aid office said it was not to late to start a payment plan so that's what they are looking into. Sometimes money can break friendships and even marriages so my advice was for him to gain the brownie points and agree to pay it just not all at once if for some reason they split up in future.
 
Texas6023 said:
Ok. I passed info along. He wasn't against paying the debt. Just caught him by surprise when his return was withheld. But the federal aid office said it was not to late to start a payment plan so that's what they are looking into. Sometimes money can break friendships and even marriages so my advice was for him to gain the brownie points and agree to pay it just not all at once if for some reason they split up in future.
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Mate, if you think that's great advice, and your buddy wants to help a deadbeat pay off her debts, great.

Frankly, I only pay my debts. We've already discussed, my philosophy on debts, so this is a problem I'd never have.

My wife never had a college debt problem, so this is another problem we'll never face. She earned a full academic ride, back in the 20th century. LOL

If I did marry a deadbeat, innocent spouse relief, or divorce would work for me. Looks as if that's what her former spouse chose, divorce that is. LOL
 

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