Navigating Joint Tax Debt After Divorce

The Scenario

Divorce often brings a whirlwind of emotions and adjustments, and one of the most complex issues that can arise is dealing with joint tax debt. In this situation, an individual recently divorced finds themselves responsible for tax liabilities incurred during their marriage. If both spouses filed joint tax returns, the IRS holds both parties equally accountable for any unpaid taxes, penalties, and interest. This can lead to unexpected financial burdens for the individual, especially if their ex-spouse is uncooperative or financially unable to contribute to the debt repayment.

The Risks You Face

One of the primary concerns with unresolved tax debt is the enforcement actions the IRS can take, which include liens, levies, and garnishments. A lien is a legal claim against your property, signaling to creditors that the IRS has a right to your assets until the tax debt is settled. This can severely impact your credit score and limit future borrowing capabilities. A levy allows the IRS to seize your bank accounts, wages, or other assets to satisfy the debt, which can result in immediate financial hardship. Additionally, the IRS may garnish your wages, deducting a portion of your paycheck directly to pay off the tax liability. Understanding these risks is crucial for anyone dealing with joint tax debt, as the consequences can be long-lasting and detrimental to financial stability.

IRS Relief Programs Available

Fortunately, there are several options available through the IRS for individuals in this situation to explore tax relief. One such option is an Offer in Compromise, which allows taxpayers to settle their tax debt for less than the full amount owed if they meet certain criteria. This can be a great avenue for those who are unable to pay their tax liabilities in full. Alternatively, an installment agreement allows taxpayers to pay off their debt in manageable monthly payments over time. For those facing financial hardship, applying for Currently Not Collectible (CNC) status may be a viable option, temporarily halting collection efforts until the individual’s financial situation improves. Additionally, individuals may qualify for penalty abatement, which can reduce or eliminate penalties associated with unpaid taxes if they can demonstrate reasonable cause for their inability to pay. Understanding these options can provide a pathway to financial relief.

Steps to Take Now

As you navigate the complexities of joint tax debt post-divorce, it’s essential to remain proactive. Collect all relevant financial documents and consult with a tax professional to assess your situation. Knowledge of your rights and options is crucial for effective resolution. Be sure to communicate promptly with the IRS to explore the relief programs that best suit your circumstances.

Disclaimer: The information provided in this article is for educational purposes only and should not be considered as legal or financial advice. Always consult a qualified professional for specific guidance related to your situation.

Get Expert Help from FreshRelief

Don’t let joint tax debt overwhelm you. FreshRelief offers expert assistance for just $29/month to help you navigate your tax challenges effectively. Reach out today to reclaim your financial future!