Can Property I Own With My Spouse Be Taken to Pay Back Taxes?
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Answer:
While filing spearately may affect your liability for any errors on the 2010 return, it will not affect the liability for taxes already owed. Innocent spouse is a term used as a basis for requests for relief from joint and several liability for understatement of income on a joint federal tax return and from liability arising from community property. It generally applies to a spouse who was not aware of the mistake and received no benefit from it. An individual may be found not liable for tax underpayment (including interest, penalties and other amounts) for a tax year if a joint return was filed for the tax year; there is an understatement of tax on the return that is attributable to an erroneous item by the other spouse; a taxpayer establishes that in signing the return he/she did not know and had no reason to know of the understatement; taking into account all of the facts and circumstances, it would be inequitable to hold the taxpayer liable for the deficiency attributable to the understatement; and a taxpayer elects the benefits of this provision, on the form that the IRS prescribes (Form 8857) , no later than the date that is two years after the date the IRS has begun collection activities with respect to the taxpayer. The IRS will consider whether an individual received a significant benefit either directly or indirectly, from the understatement; whether your spouse (or former spouse) deserted you; whether you and your spouse have been divorced or separated; and whether you received a benefit on the return from the understatement. Some states have also enacted similar laws, which vary by state, providing relief for innocent spouse taxpayers.
It is possible the IRS could attach real property if they get a judgment against you or your husband that remains unpaid and your names are both on the title. If the property was sold, the equity in the proceeds could be used to pay creditors. Courts have held that property owned by husband and wife as tenants by the entireties may not be sold to satisfy the debt of only one spouse. However, property held as joint tenants who are not tenants by the entireties may be sold to satisfy the a sole debt of one owner, up to the amount of that debtor's equity in the property. The non-debtor owner will receive the balance of his share of equity in the property from the sale. We suggest you consult the local tax attorney who is able to review all the facts and documents involved.
Marital property is generally considered to be all property acquired by a couple during their marriage or earned by either spouse during their marriage. It is all property owned by the marital estate. Generally, gifts or inheritances to either spouse along with any money or property earned prior to the marriage are the separate property of that spouse unless it is somehow "converted" into marital property. Joint property is property with more than one owner. In divorce law, joint property is distinguished from a marital asset, which refers to all property acquired during the course of the marriage, regardless of ownership or who holds the title to it. Marital assets may consist at least partly of joint assets. Joint property may be owned under different forms of ownership.
In cases where the asset is claimed to be converted to marital property by commingling, in order to prove the separate nature of the property, the other spouse may attempt to trace the funds used to separate property, such as when funds from a spouse's separate property home owned before marriage are used to purchase a joint home after marriage. In such cases, having documentation regarding the source of funding is used to trace the separate funds used to purchase the marital asset.
Generally, separate property acquired before the marriage or by gift or inheritance during the marriage may be excluded from the marital estate if neither the property nor its income has been used for the common benefit of the parties during their marriage. Where the parties regularly use property acquired by one party before marriage for the common benefit of the parties, it is more likely to be available for consideration in dividing property. The frequency of use may be considered by the court in making the decision.
The court makes a distinction between marital assets and separate assets. Marital assets are assets acquired during the marriage. Separate assets are asset which one party acquired prior to a marriage and maintained as separate property, property inherited during the marriage and property received as a gift by one party during the marriage. A party can turn a separate asset into marital asset by commingling the asset. Examples include: adding a new spouse's name to a bank account, car title, or deed to the home as joint tenants with right of survivorship.
For further discussion, please see:
http://www.irs.gov/individuals/content/0,,id=130302,00.html
