Head Spousal Liability for Taxes Off at the Pass By Filing Separately

US tax filing deadline is just a few days away. You’ve got that nagging feeling in the pit of your stomach about what your soon-to-be ex is doing regarding reporting income and paying taxes.

As a reminder, you are responsible for your ex’s failure to report income and you are liable for any tax liability that is ultimately determined to be owed. Not just half of it. All of it – if the IRS believes it will be easier to collect from you than your ex.

No matter what your marital settlement agreement or final judgment of divorce say. (Although you may be entitled to reimbursement from your ex in family court … assuming you can find any assets to fund the reimbursement.)

So, what can you do to avoid this mess?

In a nutshell, if you have reasonable concerns, follow your instincts and simply don’t file a joint return with your spouse. Instead, file your taxes separately using married filing separately.

Already messed up this year or a previous tax year?

  1. There is limited relief for people who can prove that they are an innocent spouse in the IRS framework. It’s not easy to succeed here. Besides not knowing about the unreported income, you also have to show that you had no reason to know about the unreported income … and that you did not benefit from it.
  2. If all income was reported but the full tax liability not paid in full, people who can prove that they did everything they were supposed to do and could do may be able to get equitable relief. But it’s not easy to succeed on this basis either.

Both approaches likely require the assistance of a seasoned tax professional who knows their way around the IRS … as well as receptive listeners in the IRS … and good luck.

The preventative approach of filing separately is faster and more dependable and probably a lot less stressful.

Read more in this MarketWatch article via Yahoo Finance: Are you liable for your spouse’s tax miscues?