Losing a loved one brings with it a multitude of emotions and challenges. Among the list of things to navigate during these difficult times is the often complex world of financial matters.
One question that may emerge is the responsibility regarding your spouse’s unpaid taxes in California and at the federal level after they pass away.
The IRS reports that joint filing is the most common type of return filed by married couples, with 95% choosing this filing method. If you and your spouse filed taxes jointly, you generally bear responsibility for any taxes owed, regardless of who earned the income. This means if your spouse had any unpaid federal or California state taxes at the time of their passing, you will have to pay them.
California is one of the few states that follows community property rules. In a community property state, assets and debts acquired during the marriage belong equally to both spouses. This can mean that you’re responsible for your spouse’s tax debts even if you filed separately, as long as the debt accumulated during the marriage.
Estate and taxes
In cases where you’re not directly responsible for your spouse’s tax debt, their estate might be. Before distributing assets to heirs, the executor of the estate usually settles any outstanding debts using the estate’s assets. If the estate doesn’t have enough funds to cover these debts, the heirs might not receive their intended inheritance.
The Internal Revenue Service and California’s tax agency offer certain provisions that might provide relief if you believe you shouldn’t bear responsibility for your spouse’s tax debts. For instance, you can request “innocent spouse relief” if you believe your spouse improperly reported items on a joint return.
It is important to familiarize yourself with your responsibilities regarding your spouse’s unpaid taxes. Remember to stay proactive, gather necessary information and prioritize your well-being as you manage these financial matters.