Married couples who file a joint tax return should be aware that both parties are liable for each other’s tax responsibilities, meaning if there is a balance owed, it doesn’t matter which spouse’s income the tax is owed on – both will be held equally accountable. There are some situations where one spouse may be excused from their partner’s tax liability, as the IRS offers relief for these spouses.
An example of one of these situations: A spouse, or ex-spouse reports the incorrect amount of income on a previous joint tax return or underpaid the bill, unbeknownst to the other spouse. The spouse can apply for Innocent Spouse Relief instead of being held liable for the outstanding taxes.
Those who qualify for Innocent Spouse Relief are not responsible for the tax debt of their spouse or ex-spouse.
How to Qualify
The following statements must ALL be true in order to qualify as an Innocent Spouse:
- You filed a joint tax return with your spouse
- Your spouse incorrectly reported income on the return
- You signed the return, aware that the information was incorrect and had no reason to suspect otherwise
Under these circumstances, it would be unfair to hold the innocent spouse accountable.
Taxpayers who are divorced, separated, or widowed, and did not live with your ex-spouse for at least 12 months may be eligible for Relief by Separation of Liability. When this occurs, the IRS only holds the taxpayer liable for a portion of the tax debt, while the remainder belongs to the spouse. This includes some of the interest and penalty fees as well.
If you don’t qualify for Innocent Spouse Relief, you may still be able to receive Equitable Relief. However, the IRS rules are extensive regarding when one should be granted relief. If you had no intention of committing fraud when you signed the returned with your spouse, or if you signed it under duress, you may be able to get relief from the tax liability. The IRS will grant Equitable Relief, and in doing so, you may not have to pay the unpaid taxes. In some cases, you may get a refund of some of what you paid toward your spouse’s tax debt.
