I’m sure everyone is familiar with what a pre-nuptial agreement is; you hear about celebrities and theirs all the time. Its purpose is to protect your wealth and assets when you marry, just in case that marriage ends in divorce. But, have you considered what happens if you marry a person with a tax debt? Is there a way to protect yourself from your partner’s debt, even when you share a last name?
Typically, when you get married, people begin filling their tax returns under the status of “married filing jointly”. Doing so does provide you with a tax break, but when your spouse has an outstanding tax debt, filing jointly can actually attach you to any debt that exists, even debt accumulated prior to your marriage.
I have recently been helping a client who owed an IRS tax debt prior to his marriage in 2007. The couple filed their tax returns jointly in the year 2007, which then attached his spouse to over $50,000 in tax debt. Unfortunately, this is a debt she was completely unaware of…The client’s spouse is now being threatened with wage garnishments and their joint bank account is being levied. Imagine the stress that would place on a marriage…
The best way to avoid getting yourself attached to your spouse’s previous IRS debt is to continue to file separately under the status of “married filing separate”. Even if it’s too late and you have already filed jointly there is still an option for you. If you have read our previous blogs, we have been discussing the 21 options available to you as a U.S. Taxpayer. One of those resolutions is “Innocent, or Injured, Spouse Relief”. Innocent Spouse Relief is your best shot at getting yourself un-attached from the tax debt. This, however, can be an extremely complex process. An Enrolled Agent would be able to assist you in this matter, and aid you in your dealings with the IRS. Hopefully, this is a situation you will never be faced with, but just in case, there are options meant to protect you.