When you file a joint tax return with your spouse, you are taking on “joint and several” liability for that tax debt. This means that you are equally responsible for paying any amounts due, and even if you didn’t earn the money or incur the tax debt, you have the same responsibility to pay the amount due as the spouse that incurred the debt.
So what happens when you don’t know that your spouse incurred the tax bill in the first place? Or what happens if your spouse lied on the tax return and you didn’t know that when you signed the return? Or what happens if your spouse was abusive and forced you to sign the return?
There is a way to get yourself released from the tax liability of your spouse under certain circumstances. The most common term for this is requesting “Innocent Spouse Relief”. There are other forms of relief as well: Separation of Liability Relief and Equitable Relief. The following is an explanation of each type of request:
Innocent Spouse Relief
- An underpayment of tax must have been found by the IRS – typically where they sent you a notice that taxes are due after you filed your return or you have an audit resulting in tax being owed.
- The return included an “erroneous item” – for example: underreporting of income or over reporting of deductions.
- You must have had no reason to know that the erroneous item existed.
- It would be unfair to hold you responsible for the tax liability caused by your spouse’s erroneous item.
Separation of Liability Relief
- An underpayment of tax must have been found by the IRS – typically where they sent you a notice that taxes are due after you filed your return or you have an audit resulting in tax being owed. [Click to read about different types of notices you may have received from the IRS.]
- You must be legally separated or divorced from your spouse OR widowed OR lived apart from your spouse for at least 12 months before the tax liability becomes due.
- You may not have known that there was a problem with the return, and the tax liability will be assigned to you to the extent you had knowledge.
- Available for an underpayment of tax and understatement of tax, which means this relief can be available with an audit and also if a return is filed where you haven’t been able to pay the total amount due without an audit. This could result in a refund to you.
- The IRS considers the facts and circumstances of your situation to determine if it would be fair to relieve you of the taxes. Examples are: Whether abuse is an issue; whether you would have a reason to know of the tax problem; whether you are still living with your spouse; whether you benefited from the underpayment of tax; whether you will suffer a hardship if you had to pay your spouse’s tax liability; whether you had any legal obligation to pay your spouse’s taxes such as through a divorce agreement; and whether you are generally compliant with all tax laws.
Be Diligent and Patient.
Spousal relief is known to be one of the more complex types of relief to obtain from the IRS. The process is slow, cumbersome, and difficult to navigate. Currently, applications for Innocent Spouse Relief are taking 12 to 24 months to process. In addition, keep in mind that most often administrative requests are denied and only when they are presented to a judge are they more typically granted. Many cases are denied because of mistakes made during the filing and because of lack of adequate representation. Each such case must be carefully analyzed based upon the particular facts and circumstances by a competent tax professional.