QUESTION
Why does the IRS ask for household income when debt is for individual filer?
Asked on Nov 21st, 2013 on Taxation - Michigan
More details to this question:
I owe approximately $10,000 in taxes from the years 2010 - 2012, mostly due to early withdrawals from my Thrift Savings Plan. I filed my tax returns timely and am currently paying back the taxes through an installment agreement with the IRS. For these years, I was single and filed individually. I got married in September of 2013. I am now considering doing an offer in compromise, but see that the IRS is requesting household income and expenses on the application. My husband makes a decent salary, but I don't feel that his income should be considered when I make my application because the debt is mine and I have been unemployed for over a year. Will the IRS consider his salary for the offer in compromise? Will that make me ineligible to negotiate, even though my assets and income are zero? If I don't do the offer in compromise, is there any way to keep doing installments without having the IRS charge fees and penalties? Those fees are more than my monthly payment and at this rate, I'll never pay this debt off. Thank you in advance for your thoughts.
2 ANSWERS
Business/ Commercial Attorney serving Bellevue, WA
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Lana Kurilova Rich PLLC
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Well, this is a community property state, so technically, half of your husband's income is yours and thus could be reachable by the IRS. This is why they are asking for that information. If you are already in an offer process, you must provide the information the IRS requested and see where it takes you. If the offer is denied, after all, there could be a way to successfully appeal that denial, but again, the husband's income is an issue (since half of it is yours in Washington state). Thus, an installment agreement could be the only viable option, and no, you cannot stop the interest and penalties. The only good news (relatively good) is that the IRS has 10 years to collect from you (from the date of assessment). So after the 10-year period expires, your payments will stop even if you do not pay off the entire balance.
Answered on Nov 27th, 2013 at 8:14 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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You will have to engage an attorney or tax representative and provide the details for a definitive answer.
Answered on Nov 22nd, 2013 at 10:55 AM