If my husband owes taxes should we file jointly

Marriage is based on sharing, but not all taxpayers want to share their spouse's tax debt. The Internal Revenue Service respects this and there are ways you can avoid the repercussions of back taxes your husband hasn't paid. The easiest way is to avoid filing a joint married return with him, but this may not work in all cases.

Your Liability

With one or two exceptions, spouses are not responsible for premarital tax liabilities owed by their partner. If your husband's tax debt is the result of returns he filed before you were married, you typically have no obligation to pay them.

Joint Vs. Separate Returns

One exception exists exists to this general rule. if you file a joint married return with your husband and he owes taxes from before you were married, the IRS will most likely keep the entirety of any refund to satisfy his debt, assuming the debt is more than the refund. Otherwise, it will keep a portion equal to the taxes owed. The IRS won't automatically recognize that half the refund is yours. If you file a separate married return in these circumstances, the IRS typically won't take your personal refund. The downside to filing separately is that you may lose out on some tax breaks. Taxpayers who file separate married returns typically pay more in taxes for a number of reasons, one of which is the fact that they can't qualify for certain credits, such as those associated with educational expenses and dependent care.

Injured Spouse Relief

If you elect to file a joint married return with your husband to avail yourself of the tax advantages, you're not doomed to losing your share of the refund. However, you have to take additional steps to claim it. The IRS will apply it to his debt unless you file Form 8379. Form 8379 is an injured spouse allocation. When the IRS receives it, it should divert your fair share of the refund to you, provided you qualify. To qualify, you must have earned income that was reported on the return. You must either have paid taxes on your income, such as through tax withholding on your earnings, or you must be eligible for a refundable tax credit. You must also have no liability for your husband's tax debt because it's premarital or because it results from his separate return.

Community Property Estates

The situation becomes more complicated if you live in a community property state: Louisiana, New Mexico, Washington, Wisconsin, Texas, Nevada, Idaho, California and Arizona. In some of these states, the law allows the IRS to collect past due taxes from either spouse, regardless of who owes them or who filed and signed the return. It's not a blanket rule applying to all community property states, however, so if you have a concern, speak with a tax professional. If you live in one of these jurisdictions, it doesn't matter how you file. The IRS can take your refund to satisfy your husband's debt and it can even garnish your own personal wages to pay it.

References

  • Law Offices of Jeffrey B. Kahn: Frequently Asked Questions – Resolution of IRS Debt
  • TurboTax: Married Filing Jointly Vs. Married Filing Separately
  • IRS: Injured or Innocent Spouse Tax Relief
  • Justia.com: What Are "Community Property" States? What Are "Equitable Distribution" States?

Writer Bio

Beverly Bird has been writing professionally for over 30 years. She specializes in personal finance and w, bankruptcy, and she writes as the tax expert for The Balance.

Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows them. When filing jointly, both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise from the joint return even if they later divorce. Joint and several liability means that each taxpayer is legally responsible for the entire liability. Thus, both spouses on a married filing jointly return are generally held responsible for all the tax due even if one spouse earned all the income or claimed improper deductions or credits. This is also true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. In some cases, however, a spouse can get relief from being jointly and severally liable.

Types of Relief

There are three types of relief from the joint and several liability of a joint return:

  1. Innocent Spouse Relief provides you relief from additional tax you owe if your spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits.
  2. Separation of Liability Relief provides for the separate allocation of additional tax owed between you and your former spouse or your current spouse you're legally separated from or not living with, when an item wasn't reported properly on a joint return. You're then responsible for the amount of tax allocated to you. Refunds aren't available under separation of liability relief.
  3. Equitable Relief may apply when you don't qualify for innocent spouse relief or separation of liability relief for something not reported properly on a joint return and generally attributable to your spouse. You may also qualify for equitable relief if the amount of tax reported is correct on your joint return but the tax wasn't paid with the return.

Note: You must request innocent spouse relief or separation of liability relief no later than 2 years after the date the IRS first attempted to collect the tax from you. For equitable relief, you must request relief during the period of time the IRS can collect the tax from you. If you're looking for a refund of tax you paid, then you must request it within the statutory period for seeking a refund, which is generally three years after the date the return is filed or two years following the payment of the tax, whichever is later. See Publication 971, Innocent Spouse Relief for additional restrictions on refunds available under innocent spouse relief, equitable relief, and relief based on community property laws.

Innocent Spouse Relief

You must meet all of the following conditions to qualify for innocent spouse relief:

  • You filed a joint return that has an understatement of tax that's solely attributable to your spouse's erroneous item. An erroneous item includes income received by your spouse but omitted from the joint return. Deductions, credits, and property basis are also erroneous items if they're incorrectly reported on the joint return
  • You establish that at the time you signed the joint return you didn't know, and had no reason to know, that there was an understatement of tax and
  • Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax

Separation of Liability Relief

To qualify for separation of liability relief, you must have filed a joint return and must meet one of the following requirements at the time you request relief:

  • You're divorced or legally separated from the spouse with whom you filed the joint return
  • You're widowed, or
  • You haven't been a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you request relief

You must also not have had actual knowledge of the item that gave rise to the deficiency at the time you signed the joint return, unless you can show that you signed the return under duress.

Equitable Relief

If you don't qualify for innocent spouse relief or separation of liability relief, you may still qualify for equitable relief. To qualify for equitable relief, you must establish that under all the facts and circumstances, it would be unfair to hold you liable for the deficiency or underpayment of tax. In addition, you must meet the other requirements listed in Publication 971, Innocent Spouse Relief. See Revenue Procedure 2013-34PDF for additional information about qualifying for equitable relief, including how the IRS will take into account abuse and financial control by the nonrequesting spouse in determining whether equitable relief is warranted.

Form to File

To seek innocent spouse relief, separation of liability relief, or equitable relief, you should submit to the IRS a completed Form 8857, Request for Innocent Spouse Relief or a written statement containing the same information required on Form 8857, which you sign under penalties of perjury. You may also refer to Publication 971, Innocent Spouse Relief for more information. If you request relief from the joint and several liability of a joint return, the IRS is required to notify the spouse you filed jointly with of your request and allow him or her to provide information for consideration regarding your claim.

Community Property States

If you lived in a community property state and didn't file as married filing jointly, you might qualify for relief from the operation of state community property law. Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Refer to Publication 971, Innocent Spouse Relief for more details.

Injured Spouse vs. Innocent Spouse

An injured spouse claim is for allocation of a refund of a joint refund while an innocent spouse claim is for relief or allocation of a joint and several liability reflected on a joint return. You're an injured spouse if all or part of your share of a refund from a joint return was or will be applied against the separate past-due federal tax, state tax, child or spousal support, or federal non-tax debt (such as a student loan) owed by your spouse. If you're an injured spouse, you may be entitled to recoup your share of the refund. For more information, refer to Topic No. 203, Reduced Refund, Instructions for Form 8379, Injured Spouse Allocation and Can I or My Spouse Claim Part of a Refund Being Applied Toward a Debt Owed by the Other Spouse?

Is it best to file married jointly or separately?

The IRS strongly encourages most couples to file joint tax returns by extending several tax breaks to those who file together. In the vast majority of cases, it's best for married couples to file jointly, but there may be a few instances when it's better to submit separate returns.

What if one spouse owes taxes but the other spouse doesn't Canada?

When one spouse owes money to the government while the other does not, consider sharing or transferring credits. It is important to note the Canada Revenue Agency (CRA) doesn't let one spouse's refund offset a balance owing for the other spouse.

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