When you say your vows and tie the knot, you officially bind yourself to a partner you love for better or for worse, for richer or for poorer, and in sickness and in health. Marriage is a time where you get to learn more about your husband or wife and commit to spending the rest of your lives together. While you may think you know your significant other like the back of your hand, you may find that they’ve been hiding secrets from you. One such secret can be their tax debt. There are numerous reasons someone can land on bad terms with Uncle Sam—financial hardship, medical emergency, pure neglect. Whatever the case may be, you probably want to know, “can the IRS come after me for my spouse’s taxes?” The short answer is yes, but only in certain circumstances. Whether your husband owes the IRS money or your wife, you’ll find information below on what to do if your spouse owes taxes. Read through for a thorough understanding of what to do if your wife or husband owes taxes, or use the list below to jump to a section of your choosing.
- Can I Be Held Liable for My Spouse’s Tax Debt?
- Filing Status and Liability
- Does it Matter When My Spouse’s Tax Debt Incurred?
- Can the IRS Seize My House or Assets?
- Can I Dispute Liability of My Spouse’s Back Taxes?
- What to Do If Your Spouse Owes Taxes
Can I Be Held Liable for My Spouse’s Tax Debt?Can the IRS come after you for your spouse’s taxes? In some cases, yes. The reason the IRS will track you down if your wife or husband owes taxes depends on a few factors, such as when you filed and your filing status. Whether your partner claimed false deductions or simply failed to pay the IRS money they owe, you may be held responsible for your husband or wife’s wrongdoings. We’ll go over scenarios where you may find yourself in troubled waters if your spouse has tax debt below.
Filing Status and LiabilityYour filing status is one of the key determinants of whether you can be held responsible for your spouse’s taxes. Married couples have two options when it comes to filing taxes: filing jointly and filing separately. These options are available whether you’re filing when married to a foreigner or a legal resident. Let’s take a look at each filing status and your potential liability.
Married Filing JointlyYour tax filing status matters because it determines how much of your income is taxable. Joint filing is a common choice for couples because it comes with a variety of tax breaks, such as:
- Earned Income Tax Credit
- Child and Dependent Care Tax Credit
- Lifetime Learning Education Tax Credit
- American Opportunity Education Tax Credit
- Traditional IRA deductions
- Student loan interest deductions
Married Filing SeparatelyMarried filing separately is another option couples have when it comes to filing taxes. From the latest IRS data published, of the 153 million tax returns filed in 2017, only 3.2 million were married filing separately. Why would a couple decide to file separately? One of the main reasons is because couples may not want to be liable for their partner’s tax bill. Married filing separately is a way to remain financially protected if your spouse is filing late taxes, has a large tax bill, or has any other penalties. So, is your spouse liable for your tax debt if you file separately? No. When you file separately, you assume individual liability, which means your spouse won’t be tied to your tax debt.
Does it Matter When My Spouse’s Tax Debt Incurred?If your wife or husband owes the IRS money, it’s important to remember that timing matters. The status of your marriage can determine your liability.
Before MarriageThe IRS cannot come after you for your spouse’s taxes if they incurred their debt before you said, “I do.” Any tax debt your partner accumulated before marriage is their own responsibility, which means your tax refund is protected. However, sometimes the IRS may intercept your refund and put it toward your spouse’s back taxes. If this is the case, you might qualify for Injured Spouse status and get your refund back.
During MarriageYou might be liable for any tax debt that was incurred during marriage in a year you filed jointly. As stated, when you file jointly, you assume joint and several liability. The only way to protect your refund and avoid paying off your spouse’s tax debt is by filing separately, or but applying for Innocent Spouse status.
After MarriageIn some instances, you may be liable for tax debt incurred after marriage if you still filed jointly. This only occurs when you and your spouse are separated and heading for divorce, but are still legally married by law and filed jointly. In a situation like this, you can qualify for Separation of Liability Relief if you are legally separated or not living with your current or former spouse.
Can the IRS Seize My House or Assets?If the constant thought, “if my husband owes taxes, do they come after me?” is running through your mind, it’s important to know the power the IRS has over your house and assets. Unfortunately, yes, the IRS can seize your house or assets, even if your spouse is the one who owes money to the IRS. This only happens if the debt was incurred during a year where you filed jointly on your tax return. Whether you’re the one who incurred the tax debt or your partner, the IRS can seize tax refunds, garnish wages, and even seize your house or assets, depending on how much debt is owed. However, the IRS rarely seizes physical property such as your home, car, and other assets. Instead, they’re more likely to issue a tax lien or levy. This is where the IRS will garnish your wages or use money in your bank account to pay for your or your and your spouse’s tax debt.
Can My Spouse’s Tax Debt Affect My Tax Refund?Yes, your spouse’s tax debt can affect your tax refund. If your spouse owes money to the IRS and you file jointly, you both become responsible for each other’s taxes, penalties, debt, and levies. This means your tax refund can be put toward your spouse’s back taxes, even if you weren’t responsible for the debt that was incurred.
Can I Dispute Liability of My Spouse’s Back Taxes?Now that you know situations where you may be responsible for your spouse’s back taxes, it’s time to explore ways you can dispute liability to keep your tax refund and finances protected. The IRS offers two options to provide relief to spouses who were taxed on their spouse’s behalf: Innocent Spouse Relief and Injured Spouse Relief.
Innocent Spouse ReliefInnocent Spouse Relief can be offered if a spouse failed to report income, claimed improper credits or deductions, or falsely reported income. An innocent spouse is married to someone who deliberately lied to the federal government by misreporting or hiding income, or claiming too many deductions or credits to lower their tax bill. To qualify for innocent spouse relief, the IRS lists the following conditions:
- 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