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 Dear Tax Talk:
I pay federal taxes in installments every month. If my wife and I file jointly this year, will the IRS take the whole return amount or just some of it?
-- James
 Dear
James,
The IRS has become more flexible in accepting tax payments in installments. Part of the conditions of an installment agreement are that the IRS will withhold any tax refunds you are due and apply it to the outstanding obligation.
Form 9465 is used to request an installment agreement. The instructions to the form clearly state that refunds due to you during the term of the installment agreement will be applied to your outstanding taxes. The application of any refund does not relieve you from making regular payments under the installment agreement.
An installment agreement can involve one spouse or both. If the taxes covered under the installment agreement are only your responsibility and your wife files a joint return with you, she needs to file a special form with the return or the entire refund will be applied to the installment agreement.
If your wife paid estimates or had tax withheld, or is entitled to a refundable credit, such as the earned income or additional child (Form 8812) tax credit, she may be entitled to part of the refund on your joint return. To avoid the refund offset, you should submit Form 8379 when you file your Form 1040. As the instructions explain, the IRS requires additional processing time to calculate your wife's refund as a result of filing this form.
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