Is the IRS Holding You Accountable for Your Spouse’s Debt?
When a married couple files a joint tax return, both spouses are responsible for the total tax debt generally speaking, unless the IRS grants relief of tax liability to one spouse.
Responsibility for a Spouse’s Tax Debt
Generally, married taxpayers who file a joint return are held jointly and severally liable for any tax, interest, and penalties shown on the return. This can be a major problem when one spouse is unaware of the taxable income generated by the other spouse, yet the IRS is coming after both spouses equally. However, relief may be granted for a spouse under specific IRS guidelines by filing the appropriate forms and getting approval. Three forms of relief from joint and several liability are available:
Innocent Spouse Relief
Innocent spouse relief may be granted if a joint return was filed with an understatement of tax due to erroneous items of one spouse. An understatement of tax is the difference between the total tax liability due and the amount due that is shown on the actual tax return. It is not an underpayment of tax which relates to tax that hasn’t been paid. To receive tax relief, the filing spouse must file appropriate forms within two years after IRS collections begin, and prove that he/she did not know about the understatement of tax.
Separation of Liability
Under the separation of liability, one spouse may be granted relief for his/her part of tax debt for understatement of tax. A taxpayer may request this tax relief, as well as innocent spouse relief. A request for relief must be filed within two years after IRS collections begin, and the spouse filing for relief must meet one of the following requirements:
- Must be divorced, separated, or widowed from the spouse on the joint return. Marital status is determined as of the date the request for relief is filed.
- Must not live in the same household as the spouse on the joint return for at least one full year prior to filing for separation of liability relief.
Equitable relief may be granted if a spouse doesn’t qualify for innocent spouse relief or relief by separation of liability. The IRS will examine both positive and negative factors for tax debt help. Under equitable relief, a spouse may be granted relief for both understatement of tax and/or underpayment of tax liability.