If you’re married, choosing to file a joint tax return can provide you with certain benefits. However, by filing jointly, you and your spouse are legally responsible for the tax and any additions to tax, interest, and penalties that arise as a result of the joint return. This is known as being jointly and severally liable. If your spouse claimed improper deductions or credits, you are both generally held responsible for all of the tax due. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint tax returns. A tax services firm can assist you in getting relief from a spouse’s liabilities.
Fortunately, there are cases in which a spouse can get relief from this joint and severally liability. The three types of relief from joint and several liability for spouse who filed joint returns are Innocent Spouse Relief, Separation of Liability Relief, and Equitable Relief.
Innocent Spouse Relief. Innocent Spouse Relief provides you with relief from additional tax you may owe due to the former spouse reporting income improperly, failing to report income or claiming improper deductions or credits. To qualify for Innocent Spouse Relief, you must meet all of the following conditions:
- Your jointly filed return included an understatement of tax, directly related to your spouse’s erroneous items, such as an omission of income. Erroneous items also include incorrectly reported deductions, credits, and property taxes.
- You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax
- Considering all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax.
Separation of Liability Relief. Separation of Liability Relief results from a spouse or former spouse not reporting an item properly on a joint return. This relief allocates the additional tax owed between you and your spouse or former spouse. The amount allocated to you is the amount you are responsible for. To qualify for the Separation of Liability Relief, you must meet one of the following requirements at the time you request the relief:
- You are divorced or legally separated from the spouse with whom you filed the joint return for which you are requesting relief
- You are widowed
- You have not been a member of the same household as the spouse with whom you filed the joint return at any time during the 12-mnoth period ending on the date you file the request for relief.
You do not qualify for Separation of Liability Relief if, at the time you signed the return, you had actual knowledge of the item that gave rise to the understatement of tax.
Equitable Relief. If the correct amount of tax was reported on your joint return but the tax was not paid, you may qualify for Equitable Relief. You may also qualify for Equitable Relief if you do not qualify for Innocent Spouse Relief or Separation of Liability Relief for something not reported properly on a joint return and generally attributable to your spouse.
For information regarding when to file for relief and the process involved in filing for relief, please see the StrataTax article “Get Relief from Your Spouse’s Tax Liabilities” or contact your tax services company.
You can apply for separation of liability relief and equitable relief by yourself by using the tax forms provided on the IRS website. In most cases, it may be best to contact a tax services firm due to the complexity of the tax laws.
Relief from joint and several liability should not be confused with an injured spouse claim, in which part of your share of the refund was, or will be, applied against the separate past-due liabilities. For more information, see the StrataTax article “Did You Lose Part of Your Tax Refund Because of Your Spouse?”.
Your tax preparer can provide you with more information regarding innocent spouse relief on your income tax return. StrataTax, a San Diego consulting and tax services firm, is available year-round to assist you with income tax preparation and tax planning. Call us at (858) 225-7720 to setup your free initial consultation or visit us atwww.StrataTax.com for more information.
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