What Happens If Your Spouse Owes Taxes

what happens if your spouse owes taxes

If you and your spouse file taxes jointly, paying each others’ taxes, debt, levies, and penalties will now become both your responsibility. It means that your tax refund will become a payment for your spouse’s tax debt incurred even if you’re not the one who’s responsible for it.

Before setting a decision on which filing status you are going to choose for the tax year, you might want to weigh its pros and cons first. Have a talk with your spouse about your tax obligations and whether either of you has been responsible or not.

Tax Options When Your Spouse Owes Back Taxes

Tax is one of the main responsibilities of every citizen to their country. There is a different requirement for every walk of life. It includes married filing jointly.

What about when your spouse owes back taxes even before you were married and then you filed jointly after, will you still be responsible for it? The answer is yes. You will now have joint and several liabilities for these back taxes owed unless you file for spousal tax relief.

  • Innocent Spouse Relief Depending on the circumstances, you have several options for tax relief. One of these is the Innocent Spouse Relief where you need to prove that your spouse incurred these tax debts without your knowledge. This might be a long shot since it would be hard to explain that you filed jointly without knowing about the tax debt.Once the government has proven you innocent, you will now be forgiven of all the tax debt. This includes penalties and interests for individual or self-employed income taxes but not household employment taxes, individual shared responsibility taxes, business taxes, and trust fund recovery penalties for employment taxes. Thankfully, the IRS will be the one to compute which taxes you are legally responsible for, and the ones you are not.
  • Separation of Liability Relief This innocent spouse option covers underpaid taxes and is only applicable for those who are legally separated, widowed, or are no longer married and are not in the same household at any time 12 months before filing separately.You will now become free of the tax debt owed by your former spouse, and will only be legally obligated of the tax allocated for yourself if the innocence of requesting spouse is approved.
  • Equitable Relief If you have previously filed for an innocent spouse claim and were denied by the IRS, this becomes your option. It differs from the separation of liability and innocent spouse relief because the government can relieve you of the understatement or underpayment of taxes even if you had knowledge of it.The judgment for equitable relief includes all circumstances like domestic abuse. They consider that you might have signed the joint return without challenging any items because of the fear of retaliation.
  • Injured Spouse Relief In this tax relief, the IRS considers that the spouse has taken what is supposedly yours or has injured you. If the expected refund you should have received was taken by the US treasury department as payment for your spouse’s tax debt, you become eligible for the injured spouse claim.This shall be filed immediately if you know that your refund will be affected by the federal debt of your spouse or ex-spouse. It will be one form for every tax year affected and should be filed within 3 years from the due date of the original refund or two years from the date of the offset.

How To Avoid Paying Your Spouse’s Tax Debts?

Marriage might mean for richer or for poorer but it doesn’t mean you’d need to share your debts too. If you’d want to avoid paying IRS money your spouse owed, you might want to consider married filing separately.

It is a way to keep yourself off of your spouse’s large tax bill, late filing, and other penalties. It is also a way to avoid being in the higher tax bracket especially if both of you have similar incomes.

It might not have as many benefits like having tax allowances and being qualified for credits and deductions as filing joint tax returns, it keeps your refunds on your bank account.

Always remember to keep your payments and filings up to date and start acquiring enough knowledge about tax liability. This can help you greatly in avoiding having debts. Learn from your mistakes and review the structure of your earnings in relation to tax.

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