Fisherman // injured spouse vs innocent spouse

[MGC94]

New client this year

Taxpayer is a fisherman owes $127,000+ to IRS

Just got married in 2022 

Taxpayer 1099 for fishing. Spouse has a w2. 

Which form do you do for her to not lose her refund? Is it injured spouse or innocent spouse? Is it better to file MFS?  

[Just-Lisa-Now-]

Injured, but unless that's a past due debt from before they were married, MFS is the only way for her to avoid being jointly responsible.

[rcooley25]

Sounds to me like she should have had premarital counseling.

[MGC94]

So, it is a past due amount.  He will owe this year as well which will just get added. So just do MFS? 

[MGC94]

before they were married

[Just-Lisa-Now-]

So youd use the Injured Spouse form to try and protect her share of the 2022 refund from being taken....but sounds like there isnt any refund, so Im not sure what youre trying to do.

[MGC94]

I thought it would protect her for what she paid in from her w2

[Just-Lisa-Now-]

Maybe.   Is the tax liability only because of his job?  Just because she had withholding doesnt mean she'll get that refunded.

[MGC94]

Yes only because of his job and because and the last due balance is his only 

[qbteachmt]

"I thought it would protect her for what she paid in from her w2"

She still might owe, anyway. Having or not having withholding doesn't affect your taxes owed. It affects if you owe more or are overpaid. Withholding is Prepaid against taxes owed, but it is not Taxes.

[Just-Lisa-Now-]

But theyre going to owe this year filing married joint, so she'll be part of that tax liability...you may protect her from the old tax debt, but not the current one.

[MGC94]

He gets a 1099-nec and they deduct his health ins and grub. Do they both go on the sch c? 

[Just-Lisa-Now-]

what do you mean grub?  like food?  everyone has to eat.

health insurance doesn't reduce self employment income..   

[qbteachmt]

This is assuming your taxpayer is not the owner of the boat.

There are a bunch of provisions for Fisherpersons, as long as you are describing a live-aboard, a share-of-the-catch, etc. If you have not done one before, I suggest passing on it or getting a mentor.

Because your taxpayer has a whole lot of stuff that has to be dealt with, and you are already stuck on some of the basics.

Oh, shoot. I just realized whose topic this is. That doesn't change my reply, though. It enhances that you are out of your depth on this entire subject for this taxpayer, of Fishing. Whether that also is true for the immense unpaid tax responsibility, there is not enough info to know if that is being addressed appropriately. It seems like everyone involved is either trying to avoid it or ignore it.