How to handle joint tax liabilities in divorce

On Behalf of | Mar 10, 2022 | Divorce, Family Law, High Asset Divorce |

If you are going through a divorce, you have many issues to work out to extricate yourself from your marriage. You probably filed joint tax returns with your ex-spouse while married.

If you have an outstanding tax liability, you must determine how the unpaid balance will get paid. The IRS will try to collect any joint tax liability from both parties.

Decide in the property settlement agreement

In the property settlement agreement, you will agree to distribute assets and responsibilities for debts. You should include a provision for any tax liabilities to specify how much each spouse must pay. You can also include language that allows you to recoup any money from your ex-spouse if the IRS collects taxes they have agreed to pay directly from you.

File for innocent spouse relief

The IRS provides relief from liability to persons who signed a joint tax return under certain circumstances. You could request innocent spouse relief if you were not aware that your ex-spouse included inaccurate information on a joint return that caused an understatement of the tax liability on the return. You also must show you did not have a way to know about the understatement and that it would be unfair for the IRS to hold you responsible for the liability. A claim for innocent spouse relief usually arises if the IRS adjusts a previously filed return.

If you and your ex-spouse have different incomes and resources, you want to ensure that any tax liability arising from your marriage is fairly allocated.

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