Austin Tax Defense Law Blog

Being married has its advantages. Amongst them are several tax benefits that can lessen your obligation to the IRS each year. Yet, there are instances where one spouse's actions or inaction has a significant effect on the family's tax liabilities, which may not arise until after an audit. When a family finds itself strapped with hefty tax liabilities, a spouse who feels like he or she shouldn't be on the hook for tax payments may take action in an attempt to protect themselves.

One step that can be taken is to seek innocent spouse relief. If granted, this type of relief removes all tax liability from an innocent spouse. In order to qualify, though, certain requirements must be met. For example, underreported income and improperly reported deductions and credits must be solely attributable to the other spouse. Additionally, the spouse who seeks relief must show that he or she was unaware of these errors at the time of signing the tax return. The IRS, or the court, must also find that, given all of the facts at hand, finding the innocent spouse liable for the tax liabilities would be unfair.

Austin couples that are newly separated or going through a divorce have enough on their plate without having to worry about how their new marital status will affect their taxes. Navigating these new waters can be tricky, as many have most likely not had to consider these issues previously. It can be complicated from the onset, as couples try to figure out whether they are married.

It seems like a simple enough question-are you married or single? However, the answer is not always straightforward, as IRS rules dictate that one is still married if their divorce is not finalized by December 31 of that year, even if the divorce papers have been filed. Similarly, if the divorce decree was issued on the last day of the year, taxes must be filed as if the person was unmarried the whole year. This does not change even if the couple is living separately-for the IRS, the court decree is the determinant.

No matter who you are, the IRS has the legal right to select your tax return for an audit. As scary as it may be, just because you're faced with a tax audit doesn't necessarily mean you'll owe additional money.

The first step in the tax audit process is a notification letter. Keep in mind that you'll receive this notification via snail mail, not via email or over the phone.

In an ideal world, a Texas resident would understand IRS tax law, the information required to accurately fill out the returns he or she is obligated to do, and correctly enter one's exemptions and deductions. Unfortunately, this rarely happens-incorrect amounts are often entered or forms are not filed in a timely manner. As a result, individuals may find themselves facing an audit or other penalties.

The notice from the IRS that there is something wrong with one's tax returns can be overwhelming for a filer but it is important to stay calm in such situations. It is even more beneficial to consult someone who is experienced in tax law and can not only explain the reality of what is going on but also discuss the various options available. Many filers are not even aware that the IRS offers a number of relief options for those who are unable to pay their tax obligations.