Being temporarily Furloughed can affect your taxes

Being temporarily Furloughed can affect your taxes

Being temporarily Furloughed can affect your taxes

By the pandemic COVID-19, many Americans have been affected by the financial perspective as some have lost their jobs while some have been furloughed from their work. When you lose your job or rather you are laid off, there is no assurance or promise that you would be re-hired by the same organization. However, if you are furloughed it means you can come back and start working again when the circumstances change. In the case of furlough, you will not have to face the formalities of the re-hiring process and even would be able to enjoy employer benefits such as health insurance benefits even during the times of being furloughed.

In case, you have been furloughed you must have received the Unemployment benefits and you may not be sure about the taxability of the Unemployment benefits. The Stimulus payment that has been received under the CARES Act is not taxable. However, the unemployment benefits are taxable and you would have to report them in your 2020 tax returns. After your return to work, you would be receiving your salary check and your Unemployment benefits would be coming to an end. The salary you are going to receive would remain taxable. However, if you are re-hired into your organization but with a lesser number of work hours then you would still be receiving the unemployment benefits.

What to expect while filing the tax returns?

 From a tax refund perspective, what can you expect while you are filing your tax returns for the year 2020? The tax refund you obtain would mainly depend on the amount you have taken out of your salary paycheck for the Income Tax withholding. In case you have taken out more in each pay period than the Income taxes you owed then while filing a tax return it’s obvious for you to obtain a tax refund.

  • During the year 2020, if you have received lesser paychecks as you were furloughed for a particular period of the year then there would have been few pay periods during which the withholding was taken out. So, this would result in a lower refund at the time of filing your tax returns.
  • Moreover, if you did not have any taxes that have been withheld from your unemployment benefits then you might not be having enough taxes withheld for covering taxes at the tax rate.  
  • Furthermore, you can make a voluntary request for withholding 10% of the unemployment benefit which you have received. This can be done by filling the Form W-4V i.e. Voluntary Withholding Request.
  • Since you have earned quite less during the year 2020 due to unemployment it would affect your tax rates too. This would mainly depend on for what duration you were furloughed and what was the amount of other income you had during that year.

Steps that can be taken for tax rates if furloughed

If you have been furloughed for some time during the year 2020 and there has not been enough withholding done from the Unemployment benefits, then the below-mentioned steps can be taken.

  1. You can easily adjust your withholding once you join back your work by filling the new Form W-4 Employee Withholding Certificate.
  2. You can claim various credits and deductions such as the Earned Income Tax Credit (EITC), some education tax benefits, or the Saver’s Credit, etc.  You might not have been eligible for taking these credits earlier as your income would have been higher than the income threshold.
  3. The Coronavirus Response and Relief Supplemental Appropriations Act have a special look back provision. The lookback provision would help those workers who had lower income during the year 2020 or received Unemployment income in compensation for their regular wages in obtaining more tax credits and larger refunds.


Hence, if you have been furloughed then the above-mentioned guidelines on the tax rules would be helpful for you to understand the credits, deductions along with tax refunds.

Top #5 things to know about Tax Liability amongst spouses

Top #5 things to know about Tax Liability amongst spouses

Top #5 things to know about Tax Liability amongst spouses

Marriage is the time when you vow to stand by the side of your spouse through thick and thin throughout the rest of your life. You might be having the idea that you know everything about your partner; however, there might be a secret that you might not be aware of i.e. the tax debt. You would want to know if the IRS can come after you or charge you for your spouse’s taxes. Yes, you can be liable for the tax debts of your spouse but only in certain liability amongst spouses.

1.Can I be held liable for my spouse’s tax debts?

The main reason as to why the IRS would come after you for your spouse’s tax debts depends on factors such as when you filed your tax returns and your tax return filing status. In case, your spouse had claimed false deductions or failed to pay off the debts to IRS you might be held responsible for this.

Filing status and liability determines whether you would be liable for your spouse’s tax debts or not.There are two options available for married couples i.e. filing jointly or filing tax returns separately. These options will be available to you if you are filing your tax returns being married to a foreign citizen or a resident.

a.Married filing jointly

Your tax filing status is important as it will determine your taxable income. When filing your tax returns jointly, you can claim tax allowances but both of your tax obligations become the same. By this, you would be responsible for your spouse’s tax debts and vice versa. Your tax refunds can be used by the IRS to offset the tax dues of your spouse. However, if you do not want your refunds to be used for paying your partner’s tax debts you can apply for Innocent spouse relief or injured spouse relief.

b.Married filing separately

According to the latest IRS data, out of the 153 million tax returns which were filed during the year 2017 only 3.2 million couples were married and filing their returns separately. The main cause for filing tax returns separately is to avoid being liable for their partner’s tax bill or any other tax penalties.

2.When your spouse’s tax debts were incurred?

In case your spouse owes money to the IRS, the timing of the debt incurred is important.

1.Before Marriage

If the debt of your spouse had been incurred before you got married, then you do not have any tax liability and only your spouse would be liable. In case, your refund had been intercepted by the IRS to pay off your spouse’s debts then you must apply for Injured Spouse Status.

b.During Marriage

If the tax debts of your spouse were incurred during the time of your marriage and you have filed jointly then you might be potentially liable. However, tax debts have been incurred by your spouse without your knowledge then you are not responsible.

c.After Marriage

If the tax debts have been incurred by your spouse after marriage then you might be held liable if you have been legally separated from your spouse but not divorced. In such a case, you can apply for Separation of liability relief for partial liability.

3.Can your house or assets be seized by the IRS?

Yes, the IRS has the power to seize your house or assets even though the money owed to the IRS is by your spouse. This is feasible for that year during which you have filed your tax returns jointly. However, it is very unlikely for the IRS to seize your physical property and it would rather issue a tax lien or levy.

4.Can you dispute the liability of your spouse’s back taxes?


The IRS would offer two options to provide relief to those spouses who have been taxed on behalf of their spouses.

a.Innocent Spouse Relief

Innocent spouse relief can be offered to you if your spouse failed to report his income or claimed improper credits/deductions. You are considered to be an innocent spouse if you are married to someone who had lied to the Federal Government, hidden income, or claimed too many deductions to lower his tax debts. You can fill Form 8857 and request a separate tax liability which would help you in providing relief from tax penalties or liabilities of your spouse.

b.Injured Spouse Relief

If your share of the tax refund on the joint tax return was used by the IRS to offset the debts of your spouse, you can consider yourself as an Injured Spouse. The IRS would intimate you if any part of your tax refund is being used to offset your spouse’s back taxes. You can fill Form 8379, mention “Injured Spouse” on the top of Form 1040, and obtain your refund from the IRS.

5.Open communication on finances

So, your tax return filing status and the status of your marriage will help in determining if you would be held liable for your spouse’s back taxes or not. It is necessary to maintain clear communication with your partner and understand the financial positions of each other well. Taxes are a part of your lives and you must discuss them openly.


Hence, this information on the tax liability of spouses would be helpful in case you are wondering about the difficulties you might face due to the tax secrets of your spouse.