Taxes in Divorce: Innocent Spouse Relief

Normally when you filing jointly, you are both responsible for the tax, interest and penalties due regardless if you later divorce, didn’t make any income (only your spouse did) of have a divorce decree stating one party will cover the taxes. The IRS does not care.

Innocent spouse relief allows someone to be relieved of paying taxes if the other party had errors on their reported income on the return that the innocent spouse was unaware of. According to IRS.gov, you can request innocent spousal relief if:

• You filed a joint return with your spouse

• Your taxes were understated due to errors on your return

• You didn't know about the errors

• You live in a community property state

We had a situation last year where a client had a soon-to-be ex who we knew had six-figures worth of taxes coming their way (and no way to pay them) on their 2022 filing. So we instructed the client to file MFS in order to get her name off of any liability associated with that tax liability due. Other times a married couple might choose to file MFS is when one has a tax-debt that’s being paid down (it keeps the other spouse’s refunds from being taken) or if they’re making student loan payments which are tied to the gross income being reported on their tax returns.