Understanding Spousal Tax Liability

When married couples file taxes, there are a few assumptions that are naturally made by both parties. You assume that the information on your paperwork is accurate for both of you, and that all of your income during the year is represented on your return. It’s also a given that, as a couple filing jointly, both of you will be responsible for paying any tax due. But what if your spouse does something without your permission or knowledge that adversely impacts your taxes, and you’re suddenly held liable for unexpected taxes – or worse – you’re held liable simply by virtue of being married? The IRS allows for provisions in this type of scenario, and today we’ll look at how the spousal tax liability process works.

What Are My Options?

Finding yourself suddenly on the hook for unplanned taxes can be a surprise for anyone, but when it’s a result of deception from your spouse, you need to find recourse. The Internal Revenue Code has a section for innocent spouse relief, which provides reprieve in these types of situations.

Once it’s been discovered that there was an intentional withholding of information to the IRS by your spouse, or former spouse, you can file for coverage under innocent spouse relief.  If the IRS audits your joint tax return and determines that you owe additional tax, you generally have up to two years to do so, and that time frame begins once the IRS starts to request payment for the underpaid taxes.

Guidelines For Receiving Relief

One circumstance that will encourage the IRS to absolve you of any responsibility for your spouse’s actions is if it is very clear that you had no knowledge of the situation. The following criteria must be met before this relief will be granted:

  • Your return was filed jointly, and at the time of signing and filing you had no knowledge of any transgressions. You must be able to prove that there was no way for you to know the information being submitted was incorrect.
  • The errors on the return were caused solely by your spouse. This could come in the form of income that he/she received yet did not report, or willfully misrepresenting deductions and credits.
  • Once the IRS has reviewed the case, it has to be clear to them that you should in no way be held responsible for the unpaid tax.

Where It Gets Complicated

Fraudulent schemes are far too common when it comes to the IRS, so proving your case can be very difficult.  If it can be shown that you somehow benefited from the situation, you may not be granted relief.  For instance, should the issue be that extra income wasn’t reported, and you benefited from that income, you might be held responsible.  However, if your former spouse acted fraudulently, and it would be inequitable to hold you liable for the joint taxes, the IRS can grant relief.

If think you may be eligible for innocent spouse relief, contact The Law Office of Robert Boeshaar today.  We resolve IRS tax crises, and we will fight to get you off the hook for unreasonable tax liability caused by the actions of your spouse.

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