Understanding Joint Tax Liability
When married couples file their taxes jointly, they become jointly and severally liable for the tax debt. This means that both spouses are responsible for paying the entire tax debt, even if one spouse earned all the income. IRS Publication 971 provides guidance on how to get relief from joint tax liability.
Joint tax liability can be a significant burden, especially if one spouse is unaware of the other's financial dealings or tax obligations. In such cases, the innocent spouse may be able to seek relief from the IRS, avoiding the financial consequences of the other spouse's actions.
Innocent Spouse Relief
Innocent spouse relief is a type of relief available to spouses who are not responsible for the tax debt. To qualify, the spouse must show that they did not know about the tax debt and had no reason to know about it. The spouse must also show that it would be unfair to hold them liable for the debt.
The IRS considers several factors when determining whether to grant innocent spouse relief, including the spouse's level of involvement in the couple's finances and whether they benefited from the tax debt. If the IRS grants relief, the spouse will not be responsible for the tax debt, and the other spouse will be solely responsible.
Separation of Liability
Separation of liability is another type of relief available to spouses who are getting divorced or are separated. This type of relief allows the spouses to separate their tax liabilities, so that each spouse is only responsible for their own tax debt.
To qualify for separation of liability, the spouses must be separated or divorced, and they must not have filed a joint tax return for the year in question. The IRS will then allocate the tax debt between the two spouses, based on their respective incomes and tax obligations.
Applying for Relief
To apply for relief from joint tax liability, spouses must submit Form 8857, Request for Innocent Spouse Relief, to the IRS. The form must be completed accurately and thoroughly, and it must be submitted within two years of the date the IRS first contacted the spouse about the tax debt.
The IRS will review the application and make a determination based on the spouse's eligibility for relief. If the IRS grants relief, the spouse will receive a notice stating the amount of tax debt for which they are responsible, and they will have the opportunity to appeal the decision if they disagree.
Conclusion
Relief from joint tax liability is available to spouses who meet certain eligibility requirements. Innocent spouse relief and separation of liability are two types of relief available, and spouses can apply for these types of relief by submitting Form 8857 to the IRS.
It is essential for spouses to understand their rights and options when it comes to joint tax liability. By seeking the advice of a tax professional or attorney, spouses can navigate the complex process of applying for relief and ensure that their rights are protected.
Frequently Asked Questions
What is innocent spouse relief?
Innocent spouse relief is a type of relief that allows a spouse to avoid paying tax debt if they did not know about the debt and had no reason to know about it.
How do I apply for innocent spouse relief?
To apply for innocent spouse relief, submit Form 8857 to the IRS within two years of the date the IRS first contacted you about the tax debt.
What is separation of liability?
Separation of liability is a type of relief that allows spouses to separate their tax liabilities, so that each spouse is only responsible for their own tax debt.
Do I qualify for relief from joint tax liability?
To qualify for relief, you must meet certain eligibility requirements, such as not knowing about the tax debt and having no reason to know about it.
How long do I have to apply for relief?
You must apply for relief within two years of the date the IRS first contacted you about the tax debt.
Can I appeal the IRS's decision if I am denied relief?
Yes, you can appeal the IRS's decision if you are denied relief, and you will have the opportunity to present your case to an IRS appeals officer.