Married - Joint & Several Liability

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A Joint & Several Liability

 

When a married couple files a tax return with the filing status “Married Filing Joint” they create a joint and several tax liability.

A joint and several liability means that both spouses owe the tax, together and individually.  The Internal Revenue Service can collect from either one, part or all of the tax debt.  There is no consideration for equitable division or fairness.  Who and how much they collect is usually from the spouse with the deepest pockets.  This is where “innocent spouse” relief would come into play to give specific relief.  That is the only avenue in which to seek any equitable relief.

Each spouse can seek resolution on their own, separate and apart from the other spouse.  There is no requirement that they do it together.  Resolutions have been done for couples who were together and happily married.  For some reasons, due to premarital assets/interests and pre-nup agreements, it was advantageous to resolve their joint tax issues separately.  Sometimes that does make sense.

Each spouse can pursue their own Offer in Compromise.  What is left unpaid from that is still a valid tax debt to the other spouse.

Each spouse can file a bankruptcy and that will not deter the other spouse’s ability to seek a resolution with the Internal Revenue Service.

States follow pretty much the same rule as the Internal Revenue Service, although some are different.

To avoid some issues, you may consider filing “Married Filing Separate.”  With that filing status you do lose some tax benefits.  Most tax preparers can prepare your joint return and have their software do a comparison of filing separate to see which is best.  Still, sometimes, it may be best to file separate to avoid other issues beyond bottom line tax dollars


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