Peak wedding season is in the air. Efforts to save on wedding costs can be important. However, many people seem not to consider the financial or tax situation of their prospective partner as much as they probably should, and this can potentially have a larger effect on their financial picture than wedding costs.
When you file a joint income tax return, the law makes both you and your spouse responsible for the entire tax liability. This is called joint and several liability. Joint and several liability applies not only to the tax liability you show on the return, but also to any additional tax liability the IRS determines to be due, even if the additional tax is because of income, deductions or credits of your spouse or former spouse. You remain jointly and severally liable for taxes, and the IRS can still collect them from you, even if you later divorce and the divorce decree states that your former spouse will be solely responsible for the tax.
In some cases, an INNOCENT SPOUSE will be relieved of the tax, interest and penalties on a joint tax return. Three types of relief are available to married persons who filed joint returns. 1. INNOCENT SPOUSE RELIEF. 2. SEPARATION OF LIABILITTY RELIEF. 3. EQUITABLE RELIEF.
This is right out of IRS publication 971. This publication explains these types of relief, who may qualify for them and how to get them. You can also use the Innocent Spouse Tax Relief Eligibility Explorer at Irs.gov by entering “Innocent Spouse” in the search box. You can get some help by going through this yourself to see how and if you can qualify.
In community property states like Arizona, the law generally provides that you and your spouse are both entitled to one-half of the total community income and expenses. Just like in a non-community property state, if you file a joint return in a community property state, you are both jointly and severally liable for the total liability on the return. However, community property laws are not taken into account in determining whether an item of income or expense belongs to you or to your spouse (or former spouse) if you request relief from this joint and several liability.
Married people who live in community property states, but who DID NOT file joint returns, have two ways to get relief. 1. RELIEF FROM LIABILITY FOR TAX ATTRIBUTES TO AN ITEM OF COMMUNITY INCOME. This means you are not responsible for the tax relating to an item of community income if you meet all of several certain conditions. 2. BY EQUITABLE RELIEF. This is beyond the scope of this article.
The main point here is to inform the reader that there is possible relief from tax debt for an innocent spouse that arises from a marriage, where certain factors are present. Form 8857 is used to apply for relief and the steps to do so are similar, whether you are in a community property state or not. Filing form 8857 is usually best done by a professional.
INJURED SPOUSE tax relief is applied for using form 8379 and is used if you file a joint return and all or part of your portion of the overpayment of taxes was, or is expected to be applied to your spouse’s legally enforceable past due federal or state tax, state unemployment compensation debts, child or spousal support, or federal non-tax debt, such as a student loan. These debts are usually incurred before the present marriage. You are applying to not have your part of the refund used for your spouse’s debts. Depending on each person’s situation, properly filling out these forms can be more or less complicated. Again, it is usually best to seek competent help. It is just good to be aware of the fact that some people come into marriages with tax or other debt burdens, and that sometimes the innocent or injured spouse can get relief from that. QCBN
By Ernie L. Gallardo
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