Accepted Answer

Hello again Terri,

The IRS receives copies of all W-2 forms and 1099 forms that are issued. So if your husband has received some 1099 forms for his work, then at some point in time the IRS will likley contact him regarding the fact that he has not filed a return, even if the amounts reported were relatively small.

When you are self employed, any income you have which is more than $400 for the year must be reported. The reason for this is that as a self employed person, you also owe SS and Medicare taxes on your net income in addition to regular income taxes. Since the IRS has no way of knowing what deductions your husband may have that would reduce the amount of his net earnings, they would want him to file a return.

However, if at this point he has never been contacted by the IRS, then as of right now, he has no tax liability. That being the case, you would be safe to file a joint return with your husband for the 2009 tax year. If he had losses from his business, this would help to reduce your taxable income so you should get a larger refund. Since no tax liability has been established at this point for your husband, the IRS would have no reason to withhold any refund that you are due.

My suggestion would be to go ahead and file a joint return for the 2009 tax year. Once you have filed and received your refund, after that point your husband should try to file for the prior years which he has not yet filed. Filing a joint return for 2009 is in itself not going to raise any red flags to the fact that your husband has not filed in prior years. The IRS would already have that information in their system, so for some reason they have just not acted on it yet. And as long as they have not actually sent an assessment letter to your husband on taxes that are due for prior years, they would not withhold any refund you have coming when you file in 2009.

You can, of course, always file a separate return if you choose to do so. But if your husband's business actually had a net loss, this will be yet another deduction for you to take against your income, and will also satisfy his filing requirements at least for that one tax year of 2009.

If this was helpful please press the Accept button.

Thank you Terri.

Expert:	Merlo
Pos. Feedback:	99.8 %
Accepts:
Answered:	10/28/2009

Accountant

25+ years tax consulting. Specializing in returns for US citizens living abroad