There are of course benefits to filing a joint tax return with your spouse: eligibility for tax deductions and lower tax rates come to mind. However, there can be severe repercussions that come from filing jointly, and those occur when items are improperly reported on or when income is even omitted from the tax return. If the IRS determines there are erroneous items in your return, such as unreported income or incorrect deductions, and you and your spouse have filed jointly, then both of you will be held responsible for the liabilities.
However, situations arise where one spouse may not have known about the erroneous items, or may have been coerced into signing for them. To combat such situations, the IRS created Innocent Spouse Relief. Provided you meet the qualifications, Innocent Spouse Relief allows you to be relieved of the consequences arising from a fraudulent return.
1. You and your spouse filed jointly
2. On the return, there is an erroneous item that is your spouse’s fault
3. You can prove that when you signed the return, you held no knowledge of the erroneous item
4. The circumstance shows it would be unfair to hold you accountable
On the IRS website there is a tool for determining if you are eligible for Innocent Spouse Relief. It can be found here.
If your spouse has embezzled their income, or attempted to defraud the IRS without your knowledge in any other way, even if you signed a joint tax return together, you can avoid the penalties. Provided you meet the qualifications of Innocent Spouse Relief, by filing Form 8857 you will begin the process of detaching yourself from the liabilities. Keep in mind that the IRS requires this form to be filed within two years after they attempt to collect the tax.
Contact me for more information on your options:
Bill Lowrance. (703) 506-1600. LowranceLaw.com