When spouses file a joint federal tax return, both are generally liable for the tax owed. If eligible, joint filers may seek “innocent spouse” relief that shields them from liability. In one case, it was undisputed that a married couple’s joint tax return included an understatement. The IRS and the wife agreed that she didn’t know, or have reason to know, of the understatement. She wasn’t involved in her now-former husband’s employment or business activities. He concealed his finances from her and kept separate bank accounts. The U.S. Tax Court weighed all factors and found it would be inequitable to hold her liable for the deficiency. Her request for relief was granted. (TC Memo 2024-26)
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