Wedding bells might be chiming for some North Texas people as we head into warmer weather, but for others, the thud of a gavel signals the end of a happily-ever-after.
As if a separation or divorce isn’t enough of a punch in the gut for you, it can be further complicated by the joint tax filing wrongs of your former spouse.
Unfortunately, even if it feels like you shouldn’t be responsible in this situation, you are. The IRS says, “When you file a joint tax return with your spouse, regardless of how you file, you are both responsible for the tax and any interest or penalty due.” (Even if the divorce rulings said the tax responsibility falls to your spouse or your spouse was the sole earner.)
Seems pretty unfair, huh?
(Okay, starting out bleak here, but stay with me.)
There IS good news. There are steps you can take to right the wrong, especially if you were in the dark about all those spousal misdeeds. The IRS has “innocent spouse” provisions, and they could be your ticket out of this mess.
So, you might be asking, how does the IRS define an innocent spouse? Well, if you filed a joint tax return with your former spouse, and they failed to report income or claimed false deductions leaving you with a big tax bill, you could claim Innocent Spouse Relief. If you can defend your lack of knowledge in the wrongful claims of your ex for both of you, the IRS will commute your responsibility for those misdeeds. But, it requires action on your part to make that happen.
To start, there are actually three different types of relief available for North Texas individuals seeking help for their spouse-induced tax predicament , each with its own unique eligibility requirements and procedures.
Innocent Spouse Relief. If your ex-spouse failed to report income, reported income improperly, or claimed false deductions or credits without your knowledge, you can file a claim for the IRS to remove responsibility for the filings from your tax standing. But, you have to prove you didn’t know about the incorrect information on the joint tax return.
Separation of Liability Relief. This relief is available if you’re divorced, widowed, or legally separated, and you’re now responsible for part of the tax debt that was originally on a joint tax return. The IRS will allocate the tax debt between you and your ex-spouse based on the income and deductions each of you reported on the joint tax return.
Equitable Relief. This type of relief is available if you don’t qualify for Innocent Spouse Relief or Separation of Liability Relief, but believe it’s unfair to hold you responsible for the tax debt. Examples: if your ex-spouse hid income or assets from you, or if you were subject to abuse or financial control.
Requesting Innocent Spouse Relief
The process for requesting relief is simple, but proving innocence can be difficult.
Start by filling out Form 8857 (the simple part). With this form, you’ll need to provide proof you didn’t know about the understatement of tax when you signed the joint tax return (the difficult part). There are some considerations the IRS will take into account to determine innocence, and the burden of proof will fall to you as the one requesting relief.
Also, it’s important to note that you must file the form within two years of the first IRS collection attempt.
Now, let’s get real for a moment. Going through a separation or divorce can be tough enough as it is, and dealing with tax issues on top of that can feel like a never-ending nightmare. But, take a deep breath: You’re not alone, and there is help available.
If you’re feeling overwhelmed or unsure of what to do, we’re here for you. We can guide you through the process (just as we’ve done with other North Texas clients in the same predicament) and help you gather everything you need to make your appeal, so this situation doesn’t keep you up at night.
Ready to take action? Let’s talk: 972-770-2660
In your corner,