Signing a joint tax return may result in serious implications for an innocent spouse. However, filing a joint return is a completely voluntary action and should likely be avoided in some situations.
When a person signs a joint tax return, he or she creates joint and several liability. This term means that the IRS can go after either spouse to collect the full amount of any tax that is owed. Even if a divorce court finds that the tax liability rests on one spouse, the IRS does not have to honor this finding and can still pursue tax collection procedures against either spouse. In a similar fashion, a probate court’s findings can also be ignored and an innocent spouse can be left to pay off the tax liability.
There are some benefits to filing separate returns when taxes are owed. A tax return that is filed as “single” can later be amended to a joint return. However, the opposite is not true. A joint return cannot later be amended to a single return. Additionally, a single return only allows the Internal Revenue Service to go after the individual and not his or her spouse. In the case of bankruptcy and a joint return, the IRS can pursue the other spouse if it believes that collecting from the bankrupted spouse will not be fruitful. A partnership tax return can also suffer from the K-1 of the business return. However, a business partner who does not agree with the return can attach Form 8082 to register his or her disagreement.
An innocent spouse can likely shield himself or herself from tax liability and serious consequences by following the advice of an attorney who is knowledgeable about the tax system.
Source: Forbes.com, “Tax Court Not Quick To Find Abuse In Innocent Spouse Case,” Peter J. Reilly, Dec. 18, 2012