Will I get excluded from certain tax benefits for my new business if my husband owes back taxes from before we married?

by William L. Stunkel, CPA | Nov 29, 2018

If my husband owes back taxes and I want to start a new business next year, will I get excluded from any incentives or tax cuts due to his tax responsibility prior to our marriage?

Past taxes owed by an individual’s spouse, by itself, does not preclude one from being able to take advantage of incentives and tax cuts, such as deducting allowable expenses or claiming possible tax credits if applicable. There are other things that may be affected by these past taxes, though. How past taxes due affect the individual and the spouse (and a spouse’s business) relates to several factors.

  1. Filing status
  2. Business type
  3. Whether a refund is due or tax is owed

These factors are separate items, but they are interrelated in that each of them affects the other two. Some choices may seem better if back taxes are owed, but ultimately could cause the loss of some benefits, such as tax credits or the couple’s ability to contribute to different retirement account types. There are ways to minimize or negate unwanted effects from back taxes, such as using Injured/Innocent Spouse Relief provisions. A CPA can help provide a detailed analysis related to the best filing status, business type, and how those options and the back taxes may affect whether a refund will be received or not. You can find one by using PICPA’s CPA Locator.

For more resources, check out PICPA’s Money & Life Tips or more Ask a CPA Q&As.

Answered by: William L. Stunkel, CPA, is director of business solutions with Holsinger PC in Wexford, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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