When a joint return gets an ex-spouse in trouble with the IRS

Americans hide a lot of income to evade paying taxes. The Internal Revenue Service says it annually misses roughly $500 billion in tax dollars or about one in six dollars the public owes.

Unsurprisingly, tax evaders also sometimes hide certain income from their spouses. They may choose to hide expensive gifts, gambling winnings, off-the-books jobs, cryptocurrency profits and other gains from both the government and their spouse.

The IRS has seen it all before, including innocent spouses realizing the IRS is holding them responsible for taxes they could not know they owed.

Jointly and severally liable means everyone is responsible

When spouses file a joint income tax return together, it means both spouses are “jointly and severally liable” for the taxes, interest, penalties, criminal charges or any other consequences.

The impressive-sounding term “jointly and severally liable” simply means the IRS can hold you solely responsible (liable) for everything, or they can hold your spouse solely responsible, or they can hold both of you responsible.

The liability follows the filing, not the marriage. If someone dies, for example, you remain jointly and severally liable. Even if you divorce and the judge-approved divorce settlement says one of you gets the debt, the IRS can still hold you jointly and severally liable.

Qualifying for Innocent Spouse Relief

Former spouses can ask the IRS for Innocent Spouse Relief from liability they believe should belong only to their ex.

The IRS will consider a former spouse “innocent” only if all three apply:

  • They filed a joint return with a problem that came only from their spouse. The problem can be unreported income, or improper deductions or credits, among others.
  • They show that they did not know about the problem with the return and had no reason to.
  • They show it would be wrong, given all the circumstances, to hold them responsible for the return.

Complications and alternatives to consider

Although it might all sound straightforward, possible complications are everywhere, so carefully consider involving a professional.

Perhaps most importantly, the IRS will tell your former spouse that there is a problem. This might mean you are essentially reporting your former spouse’s federal crime to the IRS, and that may require some preparation. The IRS suggests considering an “Offer-in-Compromise Doubt as to Liability.”

Also, other somewhat similar options might fit your circumstances better, such as Injured Spouse Relief, Equitable Relief or Separation of Liability Relief.