Are You Responsible for Your Spouse's Tax Debt?

Are You Responsible for Your Spouse's Tax Debt?

• Sep 15, 2022

The words “for better or for worse” can carry a lot of weight, but if your spouse has tax debt, you just might find yourself wondering whether or not those words make you responsible for that debt too. The bad news is, the answer may be yes. The good news is, the answer could be no. It all depends on the exact circumstances of the tax debt and your filing status with your spouse. Keep reading to learn more about whether or not you can be held responsible for your spouse’s tax debt.

Filing Status

The way in which you and spouse file your taxes can have a major impact on whether or not you can be held liable for their tax debt. Married couples have two options when filing their taxes: filing jointly, or filing separately. When you file jointly, you assume joint responsibility for any tax debts incurred. Regardless of who is directly responsible for the debt, both parties will be held liable for paying the debt, and the IRS can pursue legal action against both you and your spouse.

While filing jointly is by far the most popular option for married couples, you do have the option to file separately. If you know your spouse has incurred tax debt, it may be best to file separately. Doing so keeps your debts—and therefore, your responsibility for them—separate. You won’t be held responsible for any debts your spouse incurs to the IRS so long as you file separately.

When the Debt Was Incurred

In addition to your filing status, the time at which the debt was incurred also matters. If your spouse accumulated a tax debt before you were married, then you are not liable for that debt, regardless of your filing status. If the debt was incurred during your marriage and you filed jointly, you will most likely be held liable. (There are some exceptions to this, which we’ll discuss in a moment.) Of course, if you filed separately, as discussed above, you are protected from that liability. If you and your spouse are divorced, and they incurred that debt after your marriage ended, you cannot be held liable. However, if you were separated and not yet legally divorced, you may still be liable.

Your Knowledge of the Debt

As mentioned above, there are some exceptions to debts incurred during your marriage being a joint responsibility. In some cases, a spouse may hide their tax debt from the other partner. It’s not uncommon for one spouse to take on more responsibility for the finances than the other, and in these cases, you may not be aware that your partner has incurred a tax debt. If you had no knowledge of the tax debt and are not responsible for incurring it, you do have some options to avoid liability for it.

You can apply for Innocent Spouse status by filing Form 8857 with the IRS. This allows you to request a separate tax liability, which can either reduce or completely eliminate your tax liability for your partner’s tax debt. If your spouse incurred the debt while you were separate, but not legally divorced, you likely had limited knowledge of that debt. You can apply for Separation of Liability relief to alleviate your responsibility for the debt.

Disputing Spousal Tax Debt

If you’re currently facing collection actions for a spousal debt that you do not believe you are liable for, you do have some options available to you:

1. Innocent Spouse Relief – This option may be available to you if your spouse deliberately misreported or hid income, or claimed too many deductions or credits in an effort to lower their tax bill. To qualify for this relief, you must establish that you did not know about their actions, and had no reason to know that they had lied on your joint tax return. The joint return must also demonstrate that the understatement of tax is solely attributable to your spouse’s deliberate misrepresentation of your income and expenses, and not due to other items that you had knowledge of. If you can make it clear that, under the circumstances, it would be unfair to hold you liable for the tax debt, you can file Form 8857 to receive relief from the tax liability, penalties, and interest.
2. Injured Spouse Relief – This option is intended for spouses who have already had part of their tax returns withheld to cover a spouse’s debt. If this is the case for you, you can file Form 8379 and write “Injured Spouse” on the top left corner of Form 1040 to reclaim the withheld portion of your tax return.

If your spouse or ex-spouse has a tax debt for which you’re being held liable, the IRS Advocates can help. Contact us today to schedule a consultation and get the relief you deserve.