What If Your Spouse Owes Back Taxes?

When you get married, you become legally bound to the person you chose with whom to spend your life. Any marriage counselor will likely tell you it’s smart to discuss some critical parts of your relationship before getting married. One of the essential elements of marriage is finances. When you’re married, you may be combining households and funds. It’s good to know where each other stands in that area before you say, “I do.” If your spouse owes back taxes from before you were married, you could be on the hook for them. Should you decide to file taxes jointly, any previous back tax debt from your spouse will be yours. However, there are ways to get out of being liable for your spouse’s back taxes. Read on for tips on how you can get out of paying tax debt that isn’t yours.

Find out the source of the back tax debt

Before you decide on filing for a tax resolution option for your spouse’s back taxes, find the cause. Ask your spouse from where exactly that tax came. Information about the source of the tax will also be necessary when filing for tax relief. Below are some of the reasons your spouse may be carrying back taxes into your marriage.

–    Child support payments – Is your spouse defaulting on child support payments?

–    Student debt – Your spouse may be defaulting on student loan payments, which can present tax problems.

–    Court judgment – Does your spouse have a pending court judgment that hasn’t yet been satisfied?

–    Debts from the state – Your spouse may owe money to states other than the one in which you live.

The IRS can take action on you for your spouse’s debt

The IRS can take collection actions to pay for your spouse’s debts. If you file your tax returns jointly, you lose the joint refund. Even if you weren’t responsible for the initial liability, the IRS still sees it as yours. Once you sign the joint tax return, you are responsible for any tax, interest, or penalties incurred by your partner. However, the IRS isn’t always a total money monster. Sometimes the IRS realizes that one spouse should not be held liable for the other’s tax debts. For that reason, the IRS offers several ways for spouses to seek tax relief from their partner’s debts.

Innocent Spouse Relief

If you receive Innocent Spouse Relief, the IRS fully forgives you of taxes your partner owes. However, there are strict guidelines the IRS uses to approve taxpayers for Innocent Spouse Relief. You must prove your spouse, or ex-spouse incurred the tax debt without your knowledge. There are several instances wherein the IRS may grant you Innocent Spouse Relief, including:

–    If your spouse or ex-spouse fails to report income

–    When your spouse or ex-spouse reports less income

–    If your spouse or ex-spouse claims deductions or credits dishonestly

However, the IRS will often not settle for your saying you didn’t know about these situations. There are forms that you must complete before applying for Innocent Spouse Relief. Once you file for Innocent Spouse Relief, the IRS will contact your spouse or ex-spouse to gather relevant information.

How does the IRS determine if I qualify for Innocent Spouse Relief?

If the government discovers you knew about your partner’s tax issue when you signed the return, you won’t qualify. Alternatively, if the IRS finds you were not aware, you will receive total tax debt forgiveness. When you receive Innocent Spouse Relief, the IRS will also clear you from owing any interest or penalties. However, Innocent Spouse Relief only applies to individual income or self-employed tax. The tax relief program doesn’t apply to household employment taxes, individual shared responsibility payment, or business taxes. Additionally, the IRS will calculate the taxes for which you’re responsible, so you don’t have to.

Separation of Liability

Taxpayers can apply for Separation of Liability if they’re no longer married to the spouse with whom they filed jointly. Additionally, if you legally separate from your spouse, you can apply for Separation of Liability. Widows may also qualify for Innocent Spouse Relief. Additionally, you cannot be a member of the same household as your spouse for the previous 12 months. This tax relief option is only available for unpaid liabilities resulting from underpayment of taxes. 

Equitable Relief

If the IRS determines you do not qualify for the above tax relief programs, you may be eligible for Equitable Relief. With Equitable Relief, you may receive tax relief from an understatement or underpayment of tax of which you knew. When granting Equitable Relief, the IRS considers all facts and circumstances, such as spousal abuse.

Injured Spouse Relief

Innocent Spouse Relief is different from Injured Spouse Relief. With Injured Spouse Relief, the IRS considers someone took money that was rightfully yours. The Treasury Department Offset Program collects for a variety of debt, including:

–    Past-due federal or state taxes

–    Late child support payments

–    Defaulted alimony payments

–    Other federal debt, such as defaulted student loan payments

You may be eligible for Injured Spouse Relief if your money is taken to pay for your spouse’s tax debt. Taxpayers must apply for Injured Spouse Relief as soon as possible. You only have three years from the due date of the original return to apply. Additionally, the IRS gives you two years from the date your money was taken to apply.

Get Help From A Tax Relief Professional

Hiring a tax relief specialist can get you a better deal when attempting to apply for Innocent Spouse Relief. A tax attorney can help you determine which tax relief program is right for you. The tax resolution specialist can also negotiate with the IRS on your behalf and submit the necessary paperwork. Don’t let your spouse’s back tax debt leave you in bad financial shape. The IRS only wants to get what money you owe them in back taxes. Often, they are willing to help you settle back taxes, but you have to know how to try. That’s where a tax relief services company can come in handy. When you hire a tax resolution professional, there are other methods you can use to avoid expensive back tax debt. Call Platinum Tax Defenders for a free consultation today.