Filing joint tax returns is the norm for couples who are married. Joint filing is typically more convenient and offers greater tax savings than filing separately.
Joint Filing Equals Joint Liability
When you are married and file jointly, though, both spouses are equally responsible for all information reported, regardless of whether the information concerns their individual income or withholdings or not. Most of the time, this isn’t a problem. However, if your spouse makes a mistake on your joint return or intentionally misrepresents his or her tax information, the situation gets more complicated.
Penalties for False Reports by Either Party
The IRS views both partners as being at fault in the event that false information is reported on a joint tax return. Whether the error is an honest mistake or intentional, both people who signed the tax return will be held liable for all subsequent taxes, interest, and penalties, and both may face legal action.
This dual liability holds true even if you are divorced from your spouse. If you were married at the time of the joint filing, you are responsible for the accuracy of all information reported to the IRS.
The Silver Lining: Innocent Spouse Tax Relief
What do you do, though, if you did not know that your spouse made an error or false report on your shared return? Are you still considered to be at fault if you had no knowledge of the situation?
The short answer: no. This is where innocent spouse relief comes in. If you can prove to the IRS that you did not know about the false information reported by your spouse, and that no person in your position could be reasonably expected to know about it, then you will not face penalties.
To find out more about joint filing and tax liability, innocent spouse relief, or other tax matters, contact the experts at Taxation Solutions, Inc. We are your tax resource in Austin and we’re here to help!