Triggering Joint Liability

Signing a joint tax return may be problematic if it results in a joint tax liability.  A spouse who withheld enough may now be liable for tax debt triggered by their spouse.  

Accountants may encourage filing a married filing joint return because it typically shows the best tax assessment.  However, they may fail to ask how and if the tax liability can be paid.  Once the married filing joint return is filed, both taxpayers have to confront the tax liability.  It is nearly impossible to reverse a married filing joint return once it is filed.

Through innocent spouse relief, the government offers relief from joint and several tax liability.  The program promotes equity within the tax system by not permanently holding a taxpayer liable for tax debt merely because they signed a joint tax return.

If you are divorced, separated, or your spouse is deceased, you may be eligible for Innocent Spouse Relief.  The liability or a portion of the liability must belong to your ex-spouse (or even your current spouse in some cases).  Each tax year is reviewed independently for relief and there are several types of relief that may apply.

Three different types of relief are innocent spouse relief, equitable relief, and separation of liability relief. 

Depending on the type of relief, the burden of proof will shift from the taxpayer to the government.  Under separation of liability relief, the IRS must show that the taxpayer had actual knowledge of the missing item that led to the additional assessment.  For innocent spouse relief and equitable relief, the taxpayer must show that they did not reasonably know that the tax was not going to be paid or the additional item excluded from the return existed.

Understanding joint liability can be complicated. It is important to hire a competent tax professional who understands the varying rules, and who can advise you of your ability to qualify.

For more information, please contact our team at 1 888 TAXFIRM.