Responsibility for a deceased spouse’s tax debt

Discover what happens with tax debt after a spouse dies. Find out if you will have to pay even if you were unaware of the debt.

When a person's spouse dies, the debts of the deceased spouse do not go away. Creditors, including the IRS, may still try to collect on the money the person owes to them. This can become tricky when the debt is back taxes and you filed a joint return.

Zacks explains that if a person files an individual tax return, even if he or she is married, the spouse has no legal liability for the person's tax debts. This is true even after his or her death. The deceased person's estate may have to pay the taxes, but the spouse will not.

Joint tax return

If a couple files a joint return, then both spouses have the same liability for any tax debt. The IRS can and will hold the surviving spouse liable. It will use all means to collect the money, which may include placing liens on property or garnishing tax returns or wages.

Options to avoid liability

A surviving spouse may have some options to avoid liability for tax debt a spouse left behind. It depends on the situation and the knowledge the spouse had of the information in the return.

One option, according to the IRS, is innocent spouse relief. This is an option if a person can show he or she had no knowledge of the error made in the return and no reason to have known it. Based on a reasonable person, there should be no reason for the spouse to have questioned his or her partner about the return or suspect that something was not right.

Furthermore, the IRS will consider if it is fair to hold you responsible. The criteria for fairness are that you did not gain from the underpayment in any way or that your spouse left you or you separated.

Another option is separation of liability. You may be able to claim this if you are now divorced from your spouse, you had a legal separation or you did not live together for 12 months after filing the return. In this situation, you also must show you had no idea of the underpayment or show that you signed the return under duress.

Tax debt matters can become a huge financial burden. When a spouse dies, it is difficult to manage everything that happens, and ending up with a large tax bill is something that can devastate a widow or widower. In this type of situation, it can be helpful to hire an attorney, such as Frost & Associates, LLC, to help with navigating the complexities of the tax law.

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