Can the IRS Make Me Pay My Ex-Spouse’s Tax Debts After Our Divorce?

 Posted on March 18, 2021 in Divorce

Even if you and your spouse own significant assets, you may experience financial difficulties after your divorce. This can occur because of large costs during the divorce process, due to wasting or dissipation of assets by one spouse, or because you have trouble covering your ongoing expenses on a single income. The situation can become even worse if the IRS informs you that you owe money based on tax returns that were filed while you were married. Fortunately, you may have options for addressing this issue and ensuring that you will not be penalized for your spouse’s actions.

Understanding Post-Divorce Tax Debts and Innocent Spouse Relief

Both you and your ex-spouse are responsible for taxes on any joint tax returns you filed while you were married. This means that if the IRS decides to audit you based on any of these tax returns and it determines that taxes are owed, it can take action to collect the amount owed from both you and your spouse. Even if your divorce decree states that your spouse will be solely responsible for these tax debts, the IRS can disregard the court’s orders in these matters and collect money from both of you.

However, if errors on your tax returns were the sole fault of your ex, you may be able to avoid liability through innocent spouse relief. To qualify for relief, you will need to show that any underpayment of taxes occurred because of errors made by your ex-spouse on a joint tax return. At the time you signed the tax return, you must not have known or have had any reason to know about these errors. If the IRS determines that the tax debts are the fault of your ex-spouse and that it would be unfair to hold you responsible for these errors, you will not be required to pay these debts.

Applicable errors by a spouse include underreporting income or taking improper tax deductions or credits. For example, if your ex-spouse is a business owner and they misreported the amount of income they earned from the business in a certain year, you may receive relief if you were not involved with the business and had no knowledge of the actual amount of income earned by your spouse. Similarly, if your ex claimed a deduction for business expenses related to advertising without actually spending that amount on advertising-related costs, you would not be responsible, as long as you did not know about the business’s expenses.

Contact Our Naperville High Net Worth Divorce Attorneys

At Calabrese Associates, P.C., we can make sure you address tax-related issues during the divorce process, and we can help you deal with financial matters that may arise after your divorce is complete. We will work with you to make the decisions that will be most financially beneficial for you and your family, ensuring that you can be successful as you move on to the next part of your life. To learn more about how we can help with your case, contact our DuPage County divorce lawyers at 630-393-3111.

Sources:

https://www.irs.gov/businesses/small-businesses-self-employed/innocent-spouse-relief