Marriage is viewed as a union of two individuals, joining both their lives and responsibilities. As financial obligations and responsibilities intertwine, questions arise about whether one spouse is accountable for the other’s past tax liabilities. In this article, we will delve into the concept of spousal responsibility for back taxes, exploring the factors that determine liability and the potential consequences for both parties involved.
Can the IRS Hold Me Liable for My Spouse’s Tax Debt?
The short answer to this question is yes. However, there are certain factors that may come into play to decide for sure, including when you filed and under which filing status. When you get married, you suddenly have two new filing status options to choose from – married filing jointly and married filing separately. Which of these options you choose will greatly determine whether the IRS can hold you accountable for tax debt.
When you file jointly, you assume joint and several liability. The IRS employs this legal principle, which essentially means that both spouses are individually and collectively responsible for any taxes, interest, and penalties owed on a joint tax return. This means that even if you yourself did not do anything wrong, or you were unaware of any wrongdoing by your spouse, you are still 100 percent legally responsible for your shared tax debt.
On the other hand, if you file separately in a year when your spouse incurred tax debt, you are not responsible for paying it. Filing separately means you will only be held accountable for your own tax debt.
How Does Timing Affect Whether I’m Liable for My Spouse’s Back Taxes?
Timing is the second factor that can determine your liability for your spouse’s tax debt. If your spouse had tax debt before you got married, only they are responsible for that debt. If the IRS attempts to collect from you still, you can apply for Injured Spouse Relief or Innocent Spouse Relief (more on these later). If your spouse incurs tax debt during your marriage, you will use the guidelines outlined above to determine your liability. Remember, it all depends on which filing status you used during the year the tax debt appeared. If your spouse incurs tax debt after your marriage, you may be responsible for it if you filed jointly, even if you were legally separated. However, in this case, you might be able to apply for Separation of Liability relief, which will limit your liability if you and your spouse were no longer married or living together when they incurred their tax debt.
Tax Relief Options for Spouses
If your spouse incurs tax debt, you may qualify for some type of relief. Here are the most common options.
Innocent Spouse Relief
If your spouse did not report all income, claimed credits they weren’t eligible for, or took improper deductions on a joint return without your knowledge, you may qualify for Innocent Spouse Relief. This option is more common for taxpayers who are no longer married. To request relief, taxpayers should file Form 8857, Request for Innocent Spouse Relief within two years of receiving an IRS notice informing you of the tax debt.
Injured Spouse Relief
Injured spouse relief, on the other hand, is typically for individuals who are currently married, and your portion of your joint tax refund was used to pay pre-existing debt that belongs to your spouse. This can include overdue child support, other taxes due, etc. To request this relief option, taxpayers should file Form 8279, Injured Spouse Allocation within three years of the return being filed or two years from the date the tax was paid, whichever event happened later.
Separation of Liability Relief
Separation of Liability Relief applies in situations where a joint return was filed, and the innocent spouse can demonstrate that they are divorced or legally separated from the other spouse. Under this relief, the tax liabilities are divided between the spouses based on their respective shares of income, deductions, and credits. To request relief, taxpayers should file Form 8857, Request for Innocent Spouse Relief within two years of receiving an IRS notice informing you of the tax debt.
If you find you’re not eligible for innocent spouse relief or separation of liability relief, you might qualify for equitable relief. Equitable relief can save you from paying your spouse’s understated or underpaid taxes on your joint return. This relief option is typically only granted for taxes due on your spouse’s income and assets and not your own. To request relief, taxpayers should file Form 8857, Request for Innocent Spouse Relief within two years of receiving an IRS notice informing you of the tax debt.
Tax Help for Innocent Spouses
There are scenarios that would disqualify you from relief, such as knowledge of the errors your spouse made or signing an offer in compromise with the IRS. It’s also important to note that these relief options can take months for the IRS to review and process. Be sure to consult with a qualified tax professional to make sure you know your options. Luckily, the IRS recognizes the need to protect innocent parties and provides relief options for them. Optima Tax Relief is the nation’s leading tax resolution firm with over a decade of experience helping taxpayers with tough tax situations.
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