Before you book a collective Form 1040 for 2014, apperceive this: Under the acknowledged assumption of “joint and several liability,” you and your apron will both be on the angle for up to 100% of any federal income-tax underpayment for the year.
It about doesn’t amount which apron is absolutely amenable for the underpayment. This is accurate alike if the tax botheration for a joint-return year doesn’t comes to ablaze until afterwards you’ve divorced.
In added words, if your apron fails to acknowledge assets and/or fails to pay tax bills for years back you were affiliated and filing jointly, the Internal Revenue Service can potentially go afterwards you to aggregate the absolute contributed antithesis (plus any absorption and penalties) alike admitting you accept back divorced.
Worse yet, the collective and several accountability aphorism charcoal in force alike if your annulment decree states that your ex is amenable for any contributed taxes from your joint-filing years. The IRS is not apprenticed by that agreement, and the federal government will aloof go afterwards whichever actuality appears to be the easiest to aggregate from.
Thankfully, there are several means to abstain this acute outcome.
File abstracted returns
If you doubtable your apron is ethically challenged back it comes to taxes, amuse accede filing a abstracted acknowledgment for 2014 application “married filing separate” (MFS) status. Your apron will again accept to use MFS cachet too. With this procedure, you’re alone amenable for any contributed taxes on taxable assets that was, or should accept been, appear on your abstracted return. As continued as you alone comedy by the rules, your spouse’s tax misdeeds won’t anon affect you.
While application MFS cachet may aftereffect in a bigger accumulated tax bill for you and your apron than if you book jointly, accede the added amount the amount of allowance adjoin IRS problems.
The alleged innocent-spouse aphorism is advised to advice acceptable joint-filing spouses from actuality captivated amenable for their not-so-innocent spouses’ tax misdeeds. To authorize as an innocent spouse, you charge appearance that back you active the erroneous collective acknowledgment in question, you did not apperceive and had no acumen to apperceive there was a tax understatement, and that it would be arbitrary to authority you amenable for the chaste tax. For example, the innocent-spouse aphorism would be accessible if your ex buried assets from you and bootless to address that assets on your collective Form 1040, and you did not account from that income.
You administer for innocent apron abatement by filing Form 8857 (Request for Innocent Apron Relief) with the IRS as anon as you become acquainted of a federal income-tax accountability that you accept should alone be the albatross of your apron or ex-spouse due to the innocent-spouse rule. In best cases, you charge book Form 8857 no afterwards than two years afterwards the aboriginal IRS attack to aggregate contributed taxes from you.
The alleged equitable-relief aphorism is advised to accumulate acceptable joint-filing spouses from actuality unfairly captivated amenable for underpaid federal assets tax on appear income. To clarify, the candid abatement aphorism is potentially accessible back assets was appropriately appear on the collective return, but the abounding tax bill was not paid. (For abatement from taxes on unreported income, you charge await on the innocent-spouse rule.)
For example, the equitable-relief aphorism would be accessible if you and your ex filed a collective acknowledgment that appropriately appear all your assets and deductions, you gave your ex the money to pay your allotment of the tax bill, but he spent it on a abstruse cruise to Vegas while claiming he acclimated it to pay the feds.
You administer for candid abatement by filing the above Form 8857 with the IRS back you accept that an contributed federal assets tax bill should be the albatross of your apron or ex-spouse due to the equitable-relief rule.
The basal line
While the innocent-spouse and equitable-relief rules are well-intentioned, they accept some austere shortcomings.
• Afterwards you book Form 8857, the IRS charge acquaint your apron or ex-spouse that you are gluttonous innocent-spouse or candid relief. There are no exceptions to this rule, alike if you are a victim of conjugal abuse.
• The IRS charge additionally acquaint your apron or ex of the aftereffect of your appeal for innocent apron or candid relief. If your appeal is approved, your apron or ex will no agnosticism amount out that the IRS will now be gluttonous to aggregate from him or her instead of from you.
• Filling out Form 8857 is catchy (you may charge able assistance), and the acceding of innocent-spouse or candid abatement depends on the whims of IRS personnel.
For all these reasons, I anticipate it’s a abundant bigger abstraction to artlessly use affiliated filing abstracted cachet back you accept doubts about what will appear if you book jointly.
Filing a abstracted acknowledgment is in the attributes of prevention. Relying on the innocent-spouse aphorism or the equitable-relief aphorism is in the attributes of after-the-fact accident control. Blockage is consistently bigger than accident control. Amuse accumulate that in apperception back chief whether you should book accordingly for 2014 or book separately.
–Bill Bischoff is a accountant CPA with over 30 years of acquaintance as a tax specialist. He lives and works in Colorado Springs, Colo.
–This commodity ahead appeared on MarketWatch.
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