Tax Debt After Divorce (Innocent Spouse Relief) in Maryland

Filing a joint income tax return is generally beneficial to a married couple. However, the IRS has the right to hold both you and your spouse, whether you are together, separated, estranged, or divorced, jointly and severally responsible for any taxes, interest, or penalties that are owed.

This means that if the IRS cannot collect the unpaid taxes from your spouse, you are on the hook for those taxes. This is the case even if you did not know about or were not directly responsible for creating the tax liability and even if you are now divorced.

Given the potential consequences of owing a federal tax debt, you should immediately look to an experienced tax attorney for help with tax debt after divorce (innocent spouse relief) in Maryland. Depending on your situation, you may be entitled to either an innocent spouse or injured spouse relief under federal law.

Innocent Spouse Relief in Maryland

Individuals who file joint income tax returns with their current, estranged, or ex-spouse and had their income was erroneously reported on that tax return, may be eligible for innocent spouse relief. See 26 U.S.C. § 6015.

However, this mistake must be purely the fault of the other spouse; in other words, to qualify for relief, individuals cannot have had any knowledge of the mistake at the time the tax return was filed. To be eligible for innocent spouse relief, individuals must meet the following criteria:

  • The error on the joint tax return that was filed was solely attributable to the other spouse, whether it relates to reporting of income, incorrect claiming of deductions or credits, or improper reporting of the basis of the property.
  • They were not and could not have been aware of the error at the time the tax return was filed.
  • They can prove that it would be unfair to hold them responsible for the error and any resulting taxes, penalties, and interest.

Innocent spouse relief is available for individuals who are still married, but this form of relief comes into play most of the time when spouses already are separated or divorced.

Injured Spouse Relief

Individuals may be entitled to injured spouse relief in Maryland when the IRS applies their expected tax refunds to their spouses’ tax debts. If the debt that the IRS withheld the tax refund to satisfy is the total responsibility of the other spouse, then individuals may be able to qualify for injured spouse relief and get the portions of the tax refund to which they are entitled. See 26 U.S.C. § 6402. In order to qualify for this relief, both of the following must be true:

  • During the tax year in question, individuals must have reported earned income on an IRS Form 1040, had income tax withheld from their pay, made estimated tax payments, or claimed a refundable credit.
  • The individuals are not legally required to pay the spouse’s debt.

If individuals meet these eligibility requirements, then they may be entitled to innocent spouse relief, which means that they can collect the part of the tax refund that is attributable to their tax payments or refundable credit.

The most common scenarios in which individuals are entitled to injured spouse relief are when their spouses owe federal student loan debt, child support, or alimony. For other types of debts, it depends upon whether the individuals are contractually liable for their spouses’ debts; if so, they may not be entitled to injured spouse relief.

Get Help Seeking Tax Debt Relief in Maryland

If you are facing tax debts, there is hope. Tax debt after divorce (innocent spouse relief) in Maryland is available in some situations. By contacting an experienced Maryland tax debt relief lawyer, you can work toward resolving your tax issues and avoiding the harsh penalties that the IRS can issue in collecting past-due tax obligations.