Close Menu

Family Law Newsletter

Joint Tax Returns and the Innocent Spouse Doctrine

Many married couples file joint tax returns to take advantage of certain benefits offered by this filing status. This may result in the unfortunate and unintended consequence of one spouse being held responsible for the underreporting of income by the other spouse. Even when there is a divorce decree stating that one spouse will be solely responsible for any amounts due on prior tax returns, the IRS may withhold a tax refund of the other spouse to satisfy the former spouse’s tax obligation.

When a married couple files a joint tax return and penalties arise as a result of an underreporting of taxable income, the IRS will relieve one spouse from liability if that spouse can prove that he or she is “innocent” of any wrongdoing. In order for the an individual to obtain relief as an “innocent spouse,” the following criteria must be met:

  • The return filed must be a joint return, or, if the return was filed while living in a community property state, the return filed may be a “married filing separately” return
  • At the time the return was filed, the individual believed the correct amount of tax was, or would be, paid
  • The individual’s spouse failed to report or underreported his or her income
  • The individual did not have knowledge of the unreported income or erroneous items at the time the return was filed
  • It would be unfair to hold the individual liable for the tax deficiency
  • The individual applies for relief no later than two years after the IRS’s first attempt to collect the deficiency

If an individual meets the criteria for innocent spouse relief, the individual will be relieved of responsibility for the tax due on the return or any penalties or interest. Depending on the facts and circumstances, the innocent spouse may be eligible for relief of all taxes due on the return, including penalties and interest, or only partial relief.

  • Spousal Rights Regarding Personal Injury Awards
    Upon termination of a marriage by divorce, one of the most difficult problems is often division of the couple’s real and personal property. Although there are considerable differences in the way states treat property acquired by... Read more.
  • Special Tax Rules for Community Property
    A number of states are “community property” states, meaning that they recognize the concept of community property law. Community property law is dependent on state law and will therefore vary somewhat from state to state,... Read more.
  • "Excess Alimony" Under Federal Tax Laws
    Most divorces involve a division of property between the spouses. If there are children from the marriage, the parent not granted custody usually must pay monthly child support. In addition, one of the spouses may be granted monthly... Read more.
  • Non-Citizen Spouses and the Qualified Domestic Trust (QDOT)
    A QDOT is a specific type of marital deduction trust that is designed to ensure that non-citizen spouses will eventually pay any taxes that may be due upon distribution of the principal from the trust, even if the surviving spouse... Read more.
Family Law News Links
Share This Page:
Facebook Twitter LinkedIn Google Plus