Tax Newsletter

• Entertainment and Meals: The 50% Rule and Exceptions
  In most cases, you can deduct no more than 50% of certain unreimbursed business-related meals and entertainment expenses on your income tax return. This limit applies to employees or their employers, and to the... Read more.
• Rental Income and Expense Deductions
  The Internal Revenue Service (IRS) defines rental income to include any payment received as a result of the use or occupancy of property. Vacation homes, condominiums, mobile homes, boats, and even portions of property may be a source... Read more.
• Federal Tax Liens and Tenancy by the Entirety
  There are several forms of joint ownership of property, some of which provide that upon the death of one owner, the property automatically passes to the joint owner(s) (i.e., by right of survivorship). These types of joint ownership may... Read more.
• Tax Advantages of Flexible Spending Accounts
  To provide some relief from rising health care and dependent care costs, federal tax laws authorize the establishment of “flexible spending accounts” (FSAs), sometimes known as “flexible reimbursement accounts.”... Read more.

• Supreme Court rules for homeowner in ‘equity theft’ dispute
• The IRS is building its own online tax filing system. Tax-prep companies aren’t happy
• Gov. Lee Signs Single Largest Tax Cut in Tennessee History into Law
• Mickey goes to law school: Disney sues DeSantis & state officials over their 50-year+ special tax deal reductions
• Forget to File Your 2019 Taxes? You Still Can if You Want Your Refund.

Obtaining Tax Relief Through the Innocent Spouse Doctrine

Many married couples file joint tax returns to take advantage of certain benefits offered by this filing status. This may result in the unfortunate and unintended consequence of one spouse being held responsible for the underreporting of income by the other spouse. Even when there is a divorce decree stating that one spouse will be solely responsible for any amounts due on prior tax returns, the IRS may withhold a tax refund of the other spouse to satisfy the former spouse’s tax obligation.

When a married couple files a joint tax return and penalties arise as a result of an underreporting of taxable income, the IRS will relieve one spouse from liability if that spouse can prove that he or she is “innocent” of any wrongdoing. In order for the an individual to obtain relief as an “innocent spouse,” the following criteria must be met:

• The return filed must be a joint return, or, if the return was filed while living in a community property state, the return filed may be a “married filing separately” return
• At the time the return was filed, the individual believed the correct amount of tax was, or would be, paid
• The individual’s spouse failed to report or underreported his or her income
• The individual did not have knowledge of the unreported income or erroneous items at the time the return was filed
• It would be unfair to hold the individual liable for the tax deficiency
• The individual applies for relief no later than two years after the IRS’s first attempt to collect the deficiency

If an individual meets the criteria for innocent spouse relief, the individual will be relieved of responsibility for the tax due on the return or any penalties or interest. Depending on the facts and circumstances, the innocent spouse may be eligible for relief of all taxes due on the return, including penalties and interest, or only partial relief.

© 2023 NextClient.com, Inc. All rights reserved.