Is a Spouse Responsible for IRS Debts?

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One benefit of marriage is the ability to file a joint return and to take advantage of lower federal income tax rates. But when you sign a joint return, the IRS will hold you responsible for making the tax payments, regardless of which spouse actually earns the income. However, under limited circumstances, the IRS may release you from liability and hold the other spouse solely responsible for the tax debt.

Married Filing Jointly

  • When you file a joint return with your spouse, you are responsible for the entire tax debt and accountable for the accuracy of everything reported on it. This means that you and your spouse are separately responsible for paying 100 percent of the income tax due. You cannot pay half and tell the IRS to go after your spouse for the other half. For example, if you file a joint return showing an outstanding balance of $10,000 and the next day your spouse walks out the door, never to return again, the IRS can collect the entire $10,000 from you.

Innocent Spouse Relief

  • If you qualify for innocent spouse relief, the IRS can find that your spouse is solely liable for underpayments. To obtain the relief, the tax understatement must relate to income that your spouse does not report or deductions and credits that are not improper. However, the IRS will not grant the relief if at the time you sign the return you knew, or had reason to know that the return was incorrect. For example, this type of relief is appropriate where you are not involved in your spouse's business and it's impossible for you to verify its earnings. But if the tax relates to interest income earned in a joint savings account, this is something the IRS will assume you should know about, regardless of whether you understand that interest income is taxable.

Separation of Liability

  • If your situation does not warrant innocent spouse relief, you can file Form 8857 to request a release from liability for half of the tax. At the time you file the form, you must be divorced, legally separated or, if still legally married, not share a household with that spouse at any time during the 12 months prior to filing the form. Keep in mind though that the IRS will reject your request if you had actual knowledge of the inaccuracies when you signed the return.

Equitable Relief

  • If the IRS does not grant your request for separation of the tax liability, your last option is to request equitable relief. Generally, the IRS will evaluate all facts and circumstances and determine whether it's unfair to hold you accountable for the tax. But in making this determination, it will consider whether you have been cooperative, are making a good faith effort to resolve the issue, whether you are still married and the level of economic hardship you would suffer. Although many situations will qualify, a typical situation warranting this type of relief is when you give your spouse the funds to pay the tax bill and find out after your divorce that the funds never reached the IRS.

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