Spouses who file joint federal tax returns are both generally liable for the tax owed. But joint filers may be eligible for “innocent spouse” relief that shields them from liability. In one case, the wife of a real estate professional was found to have limited knowledge of her husband’s financial affairs. She lacked access to key accounts where unreported income was kept. She also had little involvement in the family finances and hadn’t lived with her husband for more than 12 months. In addition, she had limited income and assets, so being required to pay the taxes owed would be an economic hardship. The U.S. Tax Court ruled that she was entitled to innocent spouse relief. (TC Memo 2023-44)
Our Blog 