Can the IRS come after you for your spouse’s taxes? In some cases, yes. The reason the IRS will track you down if your wife or husband owes taxes depends on a few factors, such as when you filed and your filing status. Whether your partner claimed false deductions or simply failed to pay the IRS money they owe, you may be held responsible for your husband or wife’s wrongdoings. We’ll go over scenarios where you may find yourself in troubled waters if your spouse has tax debt below.
Filing Status and Liability
Your filing status is one of the key determinants of whether you can be held responsible for your spouse’s taxes. Married couples have two options when it comes to filing taxes: filing jointly and filing separately. These options are available whether you’re filing when married to a foreigner or a legal resident. Let’s take a look at each filing status and your potential liability.
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Married Filing Jointly
Your tax filing status matters because it determines how much of your income is taxable. Joint filing is a common choice for couples because it comes with a variety of tax breaks, such as:
Earned Income Tax Credit
Child and Dependent Care Tax Credit
Lifetime Learning Education Tax Credit
American Opportunity Education Tax Credit
Traditional IRA deductions
Student loan interest deductions
There are many beneficial perks to filing jointly with your spouse, such as claiming tax allowances and qualifying for credits and deductions. One downside, however, is if your spouse owes money to the IRS.
When you file jointly with your partner, you assume “joint and several liability,” which means both of your tax obligations become one and the same. This makes you both legally responsible for each other’s tax debt.
If you’re lying awake at night wondering, “can the IRS come after me for my spouse’s taxes?” the answer is yes. This is true even if you didn’t do anything wrong. In this case, the IRS will use your refund to offset your spouse’s debt. If you don’t want your tax refund going toward your partner’s back taxes, there are ways to dispute liability, such as applying for Innocent Spouse Relief or Injured Spouse Relief, which we’ll dive into later.
Married Filing Separately
Married filing separately is another option couples have when it comes to filing taxes. From the latest IRS data published, of the 153 million tax returns filed in 2017, only 3.2 million were married filing separately. Why would a couple decide to file separately? One of the main reasons is because couples may not want to be liable for their partner’s tax bill. Married filing separately is a way to remain financially protected if your spouse is filing late taxes, has a large tax bill, or has any other penalties.
So, is your spouse liable for your tax debt if you file separately? No. When you file separately, you assume individual liability, which means your spouse won’t be tied to your tax debt.
Does it Matter When My Spouse’s Tax Debt Incurred?
If your wife or husband owes the IRS money, it’s important to remember that timing matters. The status of your marriage can determine your liability.
The IRS cannot come after you for your spouse’s taxes if they incurred their debt before you said, “I do.” Any tax debt your partner accumulated before marriage is their own responsibility, which means your tax refund is protected. However, sometimes the IRS may intercept your refund and put it toward your spouse’s back taxes. If this is the case, you might qualify for Injured Spouse status and get your refund back.
You might be liable for any tax debt that was incurred during marriage in a year you filed jointly. As stated, when you file jointly, you assume joint and several liability. The only way to protect your refund and avoid paying off your spouse’s tax debt is by filing separately, or but applying for Innocent Spouse status.
In some instances, you may be liable for tax debt incurred after marriage if you still filed jointly. This only occurs when you and your spouse are separated and heading for divorce, but are still legally married by law and filed jointly. In a situation like this, you can qualify for Separation of Liability Relief if you are legally separated or not living with your current or former spouse.
Can the IRS Seize My House or Assets?
If the constant thought, “if my husband owes taxes, do they come after me?” is running through your mind, it’s important to know the power the IRS has over your house and assets. Unfortunately, yes, the IRS can seize your house or assets, even if your spouse is the one who owes money to the IRS. This only happens if the debt was incurred during a year where you filed jointly on your tax return.
Whether you’re the one who incurred the tax debt or your partner, the IRS can seize tax refunds, garnish wages, and even seize your house or assets, depending on how much debt is owed. However, the IRS rarely seizes physical property such as your home, car, and other assets. Instead, they’re more likely to issue a tax lien or levy. This is where the IRS will garnish your wages or use money in your bank account to pay for your or your and your spouse’s tax debt.
Can My Spouse’s Tax Debt Affect My Tax Refund?
Yes, your spouse’s tax debt can affect your tax refund. If your spouse owes money to the IRS and you file jointly, you both become responsible for each other’s taxes, penalties, debt, and levies. This means your tax refund can be put toward your spouse’s back taxes, even if you weren’t responsible for the debt that was incurred.
Can I Dispute Liability of My Spouse’s Back Taxes?
Now that you know situations where you may be responsible for your spouse’s back taxes, it’s time to explore ways you can dispute liability to keep your tax refund and finances protected. The IRS offers two options to provide relief to spouses who were taxed on their spouse’s behalf: Innocent Spouse Relief and Injured Spouse Relief.
Innocent Spouse Relief
Innocent Spouse Relief can be offered if a spouse failed to report income, claimed improper credits or deductions, or falsely reported income. An innocent spouse is married to someone who deliberately lied to the federal government by misreporting or hiding income, or claiming too many deductions or credits to lower their tax bill. To qualify for innocent spouse relief, the IRS lists the following conditions:
You filed a joint return that has an understatement of tax that’s solely attributable to your spouse’s erroneous item. An erroneous item includes income received by your spouse but omitted from the joint return. Deductions, credits, and property basis are also erroneous items if they’re incorrectly reported on the joint return
You establish that at the time you signed the joint return you didn’t know, and had no reason to know, that there was an understatement of tax, and
Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax
If you meet the following conditions, you can request a separate tax liability by filing Form 8857, which can provide relief from tax liability, penalties, and interest if you believe your spouse should be held completely responsible for their tax debt.
Injured Spouse Relief
Injured Spouse Relief, on the other hand, is for someone whose share of the refund on their joint tax return was used to offset any pre-existing debt incurred by their spouse. Back taxes can take a variety of forms, such as federal debt, state income tax debt, child or spousal support payments, defaulted student loans, or state unemployment compensation debt. The IRS or Department of Treasury will send you a Notice of Offset if they used part or all of your refund to pay for a past-due debt.
If you’re an injured spouse, you can receive your share of your refund by filing Form 8379 and write “Injured Spouse” on the top left corner of Form 1040.
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