Most folks who are married file tax returns jointly. This is a great option, but it does mean that both parties are liable for any mistakes or misinformation on a jointly filed return.
What happens, then, if your spouse makes an error or, worse, intentionally provides false information on your jointly filed return? The short answer is that both of you could face fines, penalties, and even legal action.
However, if you had no knowledge of any mistakes or wrongdoing, there are protections in place to keep you out of hot water. The IRS can extend “innocent spouse relief” to a partner on a jointly filed return if he or she can prove they were in the dark regarding false tax information reported by a spouse.
Who Can Benefit?
One thing to keep in mind regarding your tax liability is that both spouses continue to be responsible for a jointly filed return even after divorce. So, if you filed a joint tax return with your spouse last year and later divorced, you are still responsible for the accuracy of that jointly filed return.
If you find out after the fact that your former spouse made an error or misrepresented any tax information, the IRS will hold you both responsible for that misinformation unless you can prove that you qualify for innocent spouse relief. The same holds true, of course, for spouses who remain married.
To determine if you qualify for innocent spouse relief, the IRS will primarily consider two points:
- Actual knowledge
- Reason to know
In order to qualify for innocent spouse relief, you must prove that you did not have actual knowledge of any misinformation or errors, and that you had no reason to know. The IRS determines “reason to know” by assessing if a reasonable person in similar circumstances would have been aware of the specific tax error.
If you have questions about innocent spouse tax relief, call Taxation Solutions, Inc. today. We are your resource in Charlotte and the surrounding area for tax support, filing, audits, and more. Contact us to find out how we can help with all things tax-related.