Should you be responsible for your spouse’s tax debt?

On Behalf of | Feb 1, 2022 | Tax Debt

Whether you are working toward building a post-divorce future or have uncovered financial troubles your spouse had hidden from you, outstanding debt is never a welcome topic. Unfortunately, many individuals must resolve matters over which they lacked knowledge or control. This can quickly become an overwhelming experience when the matters concern potentially fraudulent activity or tax debt issues.

While many people feel naturally intimidated by discussions of tax debt responsibility, the IRS has numerous solutions in place to guide you toward an acceptable resolution. Based on your unique circumstances, you can pursue relief for tax debt in many ways, including:

  • Innocent spouse relief: The IRS generally ascribes the most restrictions to this type of relief. If you had filed a joint tax return and your spouse failed to report income, reported income improperly or claimed unfounded deductions, you could potentially avoid paying additional taxes through this method of relief.
  • Separation of liability relief: If you had filed a joint return and are now divorced or separated, you can potentially gain relief from tax debt using this method. While some ex-spouses can prove they had no knowledge of the incorrect or deficient information on the tax return documents, still others can prove they were forced to sign the return under duress. In these cases, IRS will hold you responsible for your portion of the tax debt but not the portion owed by your ex-spouse.
  • Equitable relief: Those who do not meet the eligibility requirements for innocent spouse or separation of liability might still find relief. If you can prove that it would be unfair to hold you responsible for your spouse’s errors, deficiencies or underpayment you might be awarded relief from the total tax debt.

It is wise to carefully examine your situation to see what form of relief you might qualify for. The goal of the IRS is not to necessarily punish people, but to reach a beneficial resolution. Often, in the form of an offer in compromise, individuals can negotiate a resolution to outstanding tax debt matters. In the case of debt issues centering on joint returns, individuals have numerous types of relief to pursue. It is wise to work with an experienced professional who can provide the guidance you need to both understand your options and purse the path that protects your best interests.