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When Is Innocent Spouse Relief Available for Tax Debts?

Posted on in Tax Services

Corpus Christi tax helpThere are a variety of divorce-related tax issues that can affect spouses, including addressing tax debts that accrued while a couple was married. When the IRS attempts to collect these tax debts, this may come as a surprise for a person who was not closely involved in managing their family’s finances while they were married or who was unaware of how their ex-spouse addressed income, deductions, and credits on a joint tax return. In these cases, innocent spouse relief may allow a person to be released from liability for some or all of their tax debts.

Qualifying for Innocent Spouse Relief

If the IRS determines that taxes are owed based on a joint tax return that was filed while a couple was married, a person may be relieved of the responsibility to pay the taxes owed and any applicable interest or penalties if they can show that the underpayment of tax was based on information provided by the other spouse. Innocent spouse relief will only apply to individual income taxes or self-employment taxes. To qualify for this form of relief, a person will need to demonstrate the following:

  • The joint tax return in question understated the taxes owed due to income that was not reported or incorrect tax deductions or credits that were claimed. For example, a business owner may have deducted certain expenses from their taxable income without actually paying these expenses.

  • When the tax return was signed, the person claiming innocent spouse relief did not know or did not have reason to know about the erroneous items on the tax return. For example, if a person was not involved in managing the finances of a business operated by their spouse, they will likely be able to show that they did not have knowledge of any issues that led to the underpayment of taxes.

  • It would be unfair to hold a person responsible for the tax debts that are owed. When looking at this issue, the IRS may consider whether a person received a direct or indirect benefit due to the underpayment of taxes that would be in excess of the normal support they would have received, whether the other spouse deserted them, and whether the couple has been separated or divorced.

  • The spouses have not transferred money or property to each other as a fraudulent scheme meant to avoid paying taxes or defraud a third party such as a creditor or business partner.

Contact Our Corpus Christi Tax Agent for Innocent Spouse Relief

Following your divorce, you may already be struggling to maintain financial stability. If you have been notified by the IRS that you owe tax debts, you will need to determine how to resolve these matters in a way that minimizes the amount you will be required to pay. At Ed Villanueva & Associates, Inc., we can advise you of your options and help you determine whether you qualify for innocent spouse relief. We will communicate with the IRS on your behalf and ensure that you can resolve these matters successfully. Contact our South Texas tax consultant today at 210-382-9015 to arrange a free consultation and learn how we can help with your case.

 

Sources:

https://www.irs.gov/businesses/small-businesses-self-employed/innocent-spouse-relief

https://www.irs.gov/taxtopics/tc205

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