Tax Returns: Know What You Are and Are Not Signing
In marriages where one spouse handles most of the finances, the other spouse may have only a surface-level understanding (or no understanding at all) of where the money is going, how the taxes are getting paid and how the couple’s financial life is arranged. This makes the financially naive spouse vulnerable if the one who controls the finances is negligently or knowingly mishandling funds.
We frequently hear from clients who suddenly find themselves on the hook for taxes and have no idea why. Typically, they signed tax returns without knowing what they were really signing. For other clients it’s even worse: their spouse has been signing their name on tax returns without even asking. In either scenario, the problem is that tax laws dictate that both spouses are jointly and individually responsible to pay any taxes, interest and penalties due on a joint tax return. So, if one spouse doesn’t pay the taxes due, the other becomes responsible. What’s more, you can remain liable for unpaid taxes even if your divorce decree states that your former spouse will be solely responsible.
If your spouse handles the finances and you usually sign tax returns without reviewing and understanding them first, you should stop doing that. And if your spouse has been signing your name to the returns, you need to end that practice right away. Remember, if your name is on that return and the IRS or the New York Tax Department comes after you for any reason, you’ll be liable, unless you can prove you are innocent of any wrongdoing.
Under federal law, you may qualify for relief from some or all of a tax bill issued to you and your spouse (or former spouse) if you meet all of the following conditions:
- There is an understatement of tax on a joint return because of your spouse’s (or former spouse’s) unreported income or improperly claimed deduction, credit or basis.
- You can prove that when you signed the return, you did not know and had no reason to know that there was an understatement of tax.
- Considering all the facts and circumstances, it would be unfair to hold you liable.
The legal team at Bryan L. Salamone & Associates, P.C. can discuss these issues with you in more depth during a free consultation. Call 1.631.479.3839 or contact us online anytime if you’re concerned about your spouse’s behavior regarding taxes. We serve clients in Suffolk County, Nassau County and throughout Long Island.