Is Your Family Liable For Your Tax Debt After Death?

In the classic 90’s comedy Grumpy Old Men, one of the main characters is at risk of losing his house to the IRS after they discovered that his late wife had years of back taxes from unclaimed income. Although the film used this plot point for dramatic effect, is it something that spouses filing their taxes jointly should ever be concerned about? The sad truth is that it is a possibility, but luckily, the IRS also offers “innocent spouse relief” to qualifying individuals.

What is Innocent Spouse Relief?

Innocent Spouse Relief was created by the IRS to protect individuals whose spouses have incurred tax liabilities that they had no knowledge of regardless of whether they are deceased or not. For example, if your spouse had a “side gig” where they took cash or electronic payments without your knowledge, and never filed the amounts as earned income, then you may be protected from their mistake. In order to qualify you must not have known or had any reason to believe that they had this additional income when you signed your joint tax return. The result may be that you as an individual are released from the tax burden entirely. 


What If I Don’t Qualify For Innocent Spouse Relief? 

Technically, even if you are filing jointly for all of your taxes, individuals are held responsible for their tax liability. It gets a little trickier when you share assets. If your spouse is still alive, then they may theoretically be able to earn the money and pay their tax liabilities. However, after death, the owed back taxes will have to come out of the estate, which means that just like in the movie, as the beneficiary to the estate, you could lose assets like your property in order for the IRS to reclaim the debt. If the assets are unable to cover the full amount, then as the surviving spouse, you may be held liable to pay the remaining tax liability. 


If you do not have a spouse and have not secured an estate plan, the tax liability will fall upon your next of kin or a legal representative who will be responsible for paying taxes or liquidating the estate. 


What Should I Do If I’m On The Hook For Someone Else’s Taxes?

Luckily, thanks to the Taxpayer Bill of Rights, every taxpayer has the ability to ask for reconsideration from the IRS. This can be done alone, but with legal representation at your disposal, you can be equipped with the necessary tools to fight back against this process.

If you find yourself in a stressful situation like owing back taxes to the IRS, and want to avoid paying additional accrued interest or penalties, it’s important to act quickly to find a resolution. The legal team at Weisberg Kainen Mark, PL has extensive experience helping individuals like you through difficult tax issues. If you assistance negotiating with the IRS, or have questions about your potential tax liabilities, call (305) 374-5544 to schedule a consultation today.

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Weisberg Kainen Mark, PL

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