The problem with secrets is this: Secrets cause problems. That’s especially true when you’re married and file a joint tax return, because you may be liable for your spouse’s secrets.
The reason is something called “joint and several liability,” which holds each of you responsible for the tax due on your federal income tax return, as well as any penalties and interest.
What if you truly had no idea — and had no reason to know — that your spouse concealed something from you on a return you filed jointly? Are you still liable?
In that case, the innocent spouse rule may provide protection. The rule is one of three exceptions to joint and several liability, and you can use it to apply for relief when you meet certain conditions.
As an example, suppose your spouse withdrew money from a retirement plan and failed to report the distributions. When you can prove you had no knowledge of the omission of income, innocent spouse relief can reduce your liability for the resulting tax.
You apply for innocent spouse relief, as well as the other exceptions to joint and several liability, on “Form 8857, Request for Innocent Spouse Relief.”
Please call for any assistance you need. It’s no secret that we’re here to help.