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How To Eliminate Income Tax Entanglements Caused By A Former Spouse

Divorcing couples eventually realize that separation also affects their tax return status. Along with the decline of a relationship, there is sometimes an element of financial deception. Divorced or separated individuals who have been assessed tax balances because of the erroneous actions of a spouse can petition the IRS for relief.

When a couple selects the tax return status of married filing jointly, both persons are legally responsible for the return. If one of the individuals intentionally provides false input, both are still held fully responsible for any additional taxes assessed. The person unaware of the original falsified input on a joint return is referred to by the IRS as an innocent spouse.

IRS Form 8857 is provided by the IRS so that an innocent party may apply for relief from the tax obligations of a spouse. To be eligible for innocent spouse relief, you must have had no knowledge of the error at the time the return was originally filed. The IRS may issue one of three possible types of relief after you file Form 8857.

Innocent spouse relief

The most straightforward relief is for you to become unencumbered by the unfair tax burden caused by the erroneous actions of a spouse. The tax and penalties associated with the error are then collected solely from your spouse. The remaining tax obligations of the joint return remain unchanged, with both parties jointly liable.

Separation of tax liability

Couples who are no longer married usually prefer to sever financial ties as much as possible. Because of the tax return error, divorced individuals may apply for a complete separation of tax obligations. The IRS then apportions the combined tax obligation of the original joint return. Both of you end up with a tax balance in proportion to your respective earnings and activities.

Married persons who have lived apart for 12 months may also apply for the apportionment of tax obligations. The filing of a request for relief will usually cause a suspension of any current IRS collection activity. If you are not eligible for innocent spouse relief or liability separation relief, you may apply for an adjustment to an unpaid tax balance.

Equitable relief

Form 8857 consists of several pages. Some of the questions are personal in nature. The IRS is able to consider many extenuating circumstances and possibly provide a reduction in the debt arising from a joint return with your former spouse.

Form 8857 is not filed with a tax return. It is mailed to a designated address, along with any necessary attachments. Contact a family law attorney for more information and advice about navigating the divorce process in a constructive manner.