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Can I be held liable for tax errors my spouse made?

Talking about money has always been tricky for couples. As a single adult, you're in charge of keeping track of where your money comes from and how it gets spent. When you get married, though, your finances and financial competence may be heavily scrutinized. Even married couples who keep separate bank accounts or pay for things separately need to discuss money management every now and then to ensure the family budget remains balanced – and to ensure taxes are filed and paid correctly.

And yet, as the years go by, many people abdicate their role in understanding how the family budget operates. They let their more financially savvy spouse take care of the taxes, or assume that the accountant did everything right. A letter of collection from the IRS can be a nasty wake-up call that all may not be perfect in paradise.

What is innocent spouse relief?

It's possible that your spouse simply made some mistakes when filling out your joint tax return. Very few people actually enjoy doing their taxes and try to get through this yearly chore as quickly as possible. Your spouse may have unwittingly under-reported personal or business income, or took deductions that you really didn’t qualify for.

Unfortunately, though, in many cases understatements are deliberate attempts to avoid paying higher taxes. You shouldn’t be held accountable for mistakes – innocent or deliberate – made without your knowledge, even if you purportedly "signed off" on them by signing your joint return. Spouses may obtain relief from any tax liabilities incurred because of mistakes their spouse made without their knowledge. This is called innocent spouse relief.

What are the qualifications?

Under revised statutes of the Tax Code, innocent spouses may generally apply for relief if all of the following are true:

  • You filed a joint return in the year noted as having errors.
  • There is a verifiable understatement of tax.
  • One spouse is definitively at fault for these understatements.
  • You, the innocent spouse, did not know about the errors or had no reason to know about the errors.

In general, you have two years from the time you receive a notice of collection from the IRS to file for innocent spouse relief. You can also apply for innocent spouse relief if you are no longer married or you are legally separated at the time you receive a notice of collection, but you still filed a joint return. This often happens when tax time rolls around amidst a divorce, so spouses still file a joint return even if they are no longer together.

All of this serves as a reminder that signing a joint tax return means, in the eyes of the government, that you both attest to the truth and validity of the tax assessment made therein. If an IRS audit finds discrepancies, it will be your responsibility to file for innocent spouse relief and prove that you were unaware of these mistakes or had no reason to be aware of them. A skilled tax attorney can review your case and help you determine the appropriate next steps.

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