Monthly Archives: February 2014

Innocent Spouses and Relief from Taxes

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So picture this; you and your spouse ended on some “not so great” terms.   You didn’t handle the finances and believed that everything was okay.   Well, then this little letter from the IRS shows up saying that you owe tons of money in back taxes.   Your heart sinks and you start contacting the IRS to find out what’s going on.   That’s when you find out that your spouse didn’t file any of your tax returns for the past three years!  What do you do?

When spouses file a joint tax return, they both sign that the information contained in it is true and accurate.    If the information turns out to be false or inaccurate, the IRS has historically viewed both spouses as liable for the resulting assessments.  If the associated taxes were not paid, the IRS would also look to both spouses to pay the delinquent amount.  In worse case scenarios, this can include criminal charges for tax evasion.

Fortunately, the IRS has modified its view of the liability of joint filers.  The IRS now recognizes that innocent spouses can’t control their deadbeat former spouses.  Thus, it allows such innocent spouses to claim three types of tax relief:

1.  Innocent Spouse Relief
2.  Relief by Separation of Liability
3.  Equitable Relief

If the IRS comes after you for the tax liability of a former spouse, you can seek tax relief under one of these three provisions if you meet all the following requirements.  First, you filed a joint return with inaccurate information.  Second, you didn’t know of the inaccuracies and didn’t have any reason to.  Finally, taking into consideration the situation, holding you liable for the tax would be unfair.

The IRS will evaluate your application and render a ruling on it once all the facts and circumstances have been considered.  The IRS may agree to simply waive any tax claim against you and go after the deadbeat spouse as the sole debtor.  Alternatively, the IRS may split the tax liability into two separate accounts, only requiring you to pay one half of the amount due.  While this may not sound great, it will immediately cut your tax debt in half.

In rare cases, you can seek equitable relief from the IRS.  Equitable relief simply is another way of saying that  making you pay the tax would be manifestly unfair.  You must show you and the spouse did not transfer assets as part of an fraudulent scheme, didn’t transfer assets with the intention of evading taxes, didn’t intend to commit fraud, didn’t pay the taxes due and you didn’t know what your spouse was up to.  Equitable relief claims need to be handled very carefully as the IRS views them with a very cynical eye.  Nonetheless, they are a last step that can be taken when all else has failed.

$50 Tax Return Preparation? You Bet!

Keep more of your money where it belongs; in your pocket!

Keep more of your money where it belongs; in your pocket!

You work hard for your money right? Maybe you’re a high school or college grad working your first gig. Maybe you do quite well and lead a simple life with minimal “wordly” possessions.  But doesn’t it leave you with a bad feeling when you have to pay $200 or more to get your “simple” return done?

Back when I first started doing returns for others, I actually cut my teeth doing them for those who didn’t make a lot.  What I mean is that I was a preparer for the IRS Volunteer Income Tax Assistance (VITA) program.  This program is FREE for those who qualify and it really humbled me; as I saw firsthand how little money some people have to survive on.

So when we opened up our retail office, I vowed that if you didn’t make a lot and your return was simple, you wouldn’t be charged a lot.  Now what do I mean by simple?  I specifically mean that you have to file form 1040-EZ.  Not sure if you filed this form last year, then click here and compare it to your tax documents.

But in the essence of time, if you meet the following requirements, then know that you qualify for our $50 tax return offer:

  1. Your filing status is single or married filing jointly
  2. You claim no dependents
  3. You, and your spouse if filing a joint return, were under age 65 on January 1, 2014, and not blind at the end of 2013
  4. You have only wages, salaries, tips, taxable scholarship and fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest was not over $1,500
  5. Your taxable income is less than $100,000
  6. You do not claim any adjustments to income, such as a deduction for IRA contributions, a student loan interest deduction, an educator expenses deduction, or a tuition and fees deduction
  7. You do not claim any credits other than the earned income credit

If you meet the above, why not save yourself some money this year?  Give us a call at 773-239-8850 and we’d be happy to welcome you to our family!

Until next time…