We Help With Marriage-Related Tax Planning & Problems
You probably found us by searching for a “divorce tax attorney” or “innocent spouse tax attorney.” Or maybe you were searching for tax tips for divorce and legal separation.
Regardless, we are glad you found us. We are tax attorneys in Houston, Texas who advise clients on marital and divorce tax issues.
We understand that dealing with tax issues during a divorce or legal separation can be overwhelming and emotionally draining. Our goal is to provide you with the guidance and support you need to navigate this difficult time.
As experienced tax attorneys, we have helped many clients successfully resolve their marital tax issues, including innocent spouse relief, tax audits, property division, and support payment deductions. We work closely with our clients to ensure they understand their tax rights and obligations and develop a comprehensive plan to achieve their goals.
About Marital Tax Planning
Marriage can bring out the best in you. There are quite a few tax planning strategies that married couples can employ to reduce the amount of taxes that they pay to the IRS.
The planning for whether to file married jointly vs. married separately is an example. Even filing separately does not offer full protection.
Marriage can also have the opposite effect. This is often true when it comes to divorce and taxes. Married couples who pay or transfer property before or after a divorce can trigger tax problems. Married couples who owe tax debts also have to deal with tax problems. These problems can also present tax planning opportunities for divorce. This is particularly true for spouses who live in community property states, like Texas, or those whose spouses owe back taxes, or those in same-sex marriages.
Property Transfers Before and After Marriage
There are a number of tax rules that can come into play when there is a divorce.
Property that is transferred may be tax-free as a gift, it may be taxed as alimony and deductible to the other spouse as such, or it may be taxable to the recipient and not deductible by the other spouse.
Transfers can also impact the tax basis each spouse has in their property.
If the couples pay too much money to the IRS and then divorce, there are often questions as to which spouse is entitled to the refund.
Those who are considering a divorce, who are going through a divorce, or who are living in the aftermath of a divorce should contact an experienced divorce tax attorney to go over their options.
About Innocent Spouse Relief
If there is an unpaid tax debt and a divorce or an expected divorce, you may consider the innocent spouse relief rules given the change by the Taxpayer First Act.
If you file a joint tax return with your spouse then both you and your spouse are fully liable for any errors or omissions on the tax return. This joint tax liability allows the government to collect the tax owed from one or both spouses. To help alleviate this inequity, the law provides relief for innocent spouses.
There are three types of innocent spouse relief:
- Basic Relief – this relief is available if a joint tax return was filed but the item giving rise to the tax was for the other spouse and, unbeknownst to the innocent spouse, it was not reported on the tax return.
- Separation Relief – this relief is available for spouses who are separated, divorced, or living apart.
- Equitable Relief – this relief is available if the other two types of innocent spouse relief are not available and it would be inequitable to hold the innocent spouse liable for the tax when taking into account all of the facts and circumstances.
Each of these options has different requirements.
Qualifying for Innocent Spouse Relief
While the requirements for each type of innocent spouse relief are different, there are some common elements that must be met to qualify.
Innocent spouses include spouses that had nothing to do with and were unaware of their spouse’s tax errors or omissions. This is referred to as the actual knowledge requirement.
The key to qualifying for innocent spouse relief is to prove that the innocent spouse did not benefit from the funds that should have gone to pay the tax liability.
Misconceptions about Innocent Spouse Relief
There are some common misconceptions about when an innocent spouse can qualify. Here are a few examples (that are true statements):
- Those who are not truly “innocent” can also qualify.
- Evidence that the innocent spouse earned the income might not be a problem.
- You do not need to be divorced to qualify for innocent spouse relief.
- If your spouse died, the estate can qualify for relief if the decedent would have qualified if they were living.
- The party who is granted innocent spouse may qualify for a tax refund.
- One spouse cannot prevent the other spouse from qualifying for innocent spouse relief by filing a bankruptcy petition.
As you can see from these examples, the rules for innocent spouse relief are quite nuanced.
An experienced tax attorney can help you determine if you or your spouse qualify for innocent spouse relief.
Separate Liability Relief for Community Property Taxpayers
In addition, if you live in Texas or another community property state, Section 66 provides additional remedies for those who filed as “married filing separate.”
This separate liability relief allows taxpayers in community property states to obtain an innocent-spouse-like remedy when they filed separate tax returns.
Get Help With Your Marriage-Related Tax Problems
We are experienced tax attorneys in Houston, TX. We help clients with marriage-related tax planning and problems. This includes helping clients with innocent spouse claims.
Please call us at (713) 909-4906 or schedule an appointment with our divorce tax attorneys to discuss your situation.
More About Marriage-Related Tax Issues
- Recovering Taxes Paid for Another PartyIf you pay tax for another party, can you recover the payment if the tax is not owed? The answer is generally “no,” as you cannot sue the Federal government unless it consents and it only consents in limited circumstances.… Continue reading Recovering Taxes Paid for Another Party
- Late-Filed Tax Returns & Excess CollectionsLife happens. We all experience it. There are times when life events can result in tax returns being filed late. Our tax laws offer little in way of leniency when this happens. The IRS will assess late filing penalties. Worse… Continue reading Late-Filed Tax Returns & Excess Collections
- A New Beginning for Innocent Spouse ReliefThe Taxpayer First Act of 2019 made several changes that impact how tax cases are handled. We are just now seeing some of these changes play out administratively and in court. The recent Bacigalupi v. Commissioner, Docket No. 20480-21 (U.S.… Continue reading A New Beginning for Innocent Spouse Relief
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