Couples and Taxes…What You Should Know

Most everyone knows there is a time limit for filing income tax returns. Classically it is April 15 – or the next business day if the 15th falls on a Saturday, Sunday or holiday – but by the filing of an application for automatic extension it can be postponed to October 15 — or the next business day, etc. Married persons have the option of filing separately or jointly. If they file separately, they will have 3 years from the due date of the return or the filing date, whichever is longer, to amend and file jointly. Contrariwise, if they file jointly, they will have only until the due date for filing that return to amend and file separately. If they do not, they are stuck with the consequences – whether good or bad – and will both be liable for any taxes due on that return, even if only one of them would have been liable if they had filed separately. Separated or divorced taxpayers might be able to escape such joint liability under certain circumstances. Such relief may be found in Section 6015 of the Internal Revenue Code – the innocent spouse provision.

Section 6015(b) provides relief for understatements of tax attributable to certain erroneous items on a return;
Section 6015(c) provides relief for a portion of an understatement of tax to taxpayers who are separated or divorced; and,
Section 6015(f) provides equitable relief to taxpayers who do not qualify under either of the first two provisions.
While the latter two provisions might protect an “innocent spouse” from having to pay a tax otherwise attributable to the other spouse, only Section 6015(b) permits recovery of a refund of an overpayment.

To qualify for Section 6015(b) relief, all of the following must be satisfied:

  • a)
  • A joint return must have been made for the year in question;

  • b)
  • There was an understatement of tax attributable to one or more erroneous items of the non-requesting spouse;

  • c)
  • The requesting spouse established in that signing the return he/she did not know, and had no reason to know, that there was such an understatement;

  • d) Taking into account all the facts and circumstances, it would be inequitable to hold the requesting spouse liable for the deficiency attributable to the understatement; and,
  • e) The requesting spouse elects to invoke Section 6015(b) within two years after the IRS has begun collection action with respect to the requesting spouse.

The requirements are conjunctive: they ALL must be met. The failure of a requesting spouse to satisfy any one element will preclude relief. Also, the burden is on the requesting spouse to prove his/her entitlement to Section 6015(b) relief. Yet, even with such tight restrictions on obtaining innocent spouse relief, it can be done and, under the right facts and circumstances, can relieve one of two joint filers from having to pay a tax liability which rightfully should be paid only by the other.

Contact Bruce H. Williams, Esquire

We have more than 40 years of experience helping people in New Jersey with tax matters. Contact us by e-mail or call us at 856-795-0800 to schedule an initial consultation.

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