Tax Relief After Divorce or Death of a Spouse: Unique Tax Issues, Deadlines & Relief Options

Major life changes often reveal hidden tax problems—unfiled returns, unpaid taxes, and joint liabilities that can follow you for years without proper action.

This guide covers tax relief strategies specific to divorce and widowhood, including innocent spouse relief, how to separate tax liabilities, and when professional help from our best tax relief companies becomes essential.

Tax Issues in Divorce

Divorce doesn't automatically separate you from joint tax obligations. Understanding your options before finalizing a divorce can prevent years of collection problems.

Joint vs. Separate Tax Returns

• Filing status during divorce: You're considered married for the full tax year unless the divorce is final by December 31. You can file married filing jointly (MFJ) or married filing separately (MFS) for any year your divorce wasn't final. 

• After divorce is final: You file as single or, if you have dependent children meeting IRS requirements, head of household. 

• Why filing status matters for debt: Joint returns create joint and several liability—the IRS can collect 100% of the debt from either spouse, regardless of who earned the income or caused the underpayment.

Joint Tax Debt Liability for Pre-Divorce Years

Joint and several liability means the IRS can collect the full tax debt from either spouse—even after divorce. If your ex doesn't pay their share, the IRS pursues you for 100% of the debt from any jointly filed returns during your marriage.

Common scenarios include:

• Your spouse understated income or claimed improper deductions without your knowledge.
• Your ex agreed to pay the tax debt in your divorce decree but never followed through.
• You signed joint returns without reviewing them.
• A self-employed spouse underreported business income.

Real-World Example of Joint Tax Debt Liability

The Tax Clinic at University of Minnesota Law School represented a stay-at-home mom with no college degree who discovered she owed more than $335,000 in federal tax liability.

Her ex-husband had failed to file correct returns for nearly a decade during their marriage. Despite having no involvement in the business that generated the underreporting, she was held liable for the full amount.

The Tax Clinic filed for innocent spouse relief under Internal Revenue Code § 6015, submitting over 100 pages of documentation proving her lack of knowledge and involvement. The IRS granted the relief and removed her liability, eliminating the six-figure debt and associated liens.

Innocent Spouse Relief Options

Three types of relief exist for joint tax liability:

1. Innocent Spouse Relief

You didn't know (and had no reason to know) about the tax understatement when you signed the return. The underreporting must be attributable to your spouse's erroneous items (unreported income or improper deductions), and it would be unfair to hold you liable given the circumstances.

2. Separation of Liability Relief

This option allocates the tax deficiency between you and your former spouse based on individual items. You must be divorced, legally separated, or have lived apart for 12+ months. You must also prove you didn't know about the items causing the deficiency.

3. Equitable Relief

When you don't qualify for the first two options, the IRS may grant equitable relief if holding you liable would be unfair based on factors like abuse, financial control, or lack of benefit from the unpaid taxes. This applies to both understatements and underpayments of tax.

How Divorce Agreements Should Address Tax Liabilities

• What divorce decrees should include: Specify who pays any known tax debt for joint returns. Require cooperation on unfiled returns. Address who claims children as dependents. Establish indemnification if one spouse is later held liable for the other's debt. Include provisions for tax refunds and future audits.
• Critical limitation: Divorce agreements bind you and your ex-spouse but don't bind the IRS. Even if your ex agreed to pay all joint tax debt, the IRS can still collect from you. You would need to sue your ex separately to recover what you paid.

Pro tip: Request innocent spouse or separation of liability relief from the IRS in addition to divorce decree provisions. Don't rely solely on divorce agreements for IRS protection.

Tax Issues After the Death of a Spouse

Losing a spouse creates immediate tax filing obligations and potential liability for debts you may not have known existed.

Joint Return Implications

• Final joint return: The surviving spouse can file a joint return for the year of death if not remarried by year-end. This may provide better tax rates than filing separately. The executor or administrator can also consent to joint filing. 

• Filing deadline: April 15 of the year following death (same as regular returns). Extensions available. 

• Signature requirements: Surviving spouse signs return and writes "Filing as surviving spouse" in signature area.

• Liability for joint return: Filing a final joint return makes you liable for the full tax on that return. If the deceased spouse had unreported income or improper deductions, you become jointly liable unless you qualify for relief.

Estate Tax vs Income Tax Considerations

• Estate tax: Only applies if the estate exceeds $13,990,000. Most surviving spouses won't face estate tax. Paid from estate assets, not the surviving spouse personally (unless assets transferred). 

• Income tax on final return: Surviving spouse is liable if filing jointly. Covers income from January 1 through the date of death. 

• Estate income tax: Separate from decedent's final return. Covers income earned by estate assets after death. Filed by executor on Form 1041.

How Tax Debt of Deceased Spouse Is Handled

• Estate responsibility: The deceased's estate is primarily liable for tax debts. IRS can file claims against estate assets. The executor must resolve tax issues before distributing assets to heirs. 

• Surviving spouse liability: Limited to jointly-filed returns or community property states. Not liable for deceased spouse's separate business debts or individual returns (generally). May inherit liability if assets are transferred directly (joint bank accounts, transfer-on-death accounts).

• Community property states: Nine states treat income and assets during marriage as jointly owned: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, the surviving spouse may have greater liability for the deceased spouse's debts.

The IRS doesn't publish success rates for innocent spouse relief claims filed after a spouse's death. However, a 2023 Treasury Inspector General for Tax Administration (TIGTA) audit found that many claims aren't properly investigated by the IRS, which can hurt your approval chances.

In Smith v. Commissioner, the US Tax Court granted relief to a taxpayer whose husband had hidden income on their joint return. The court ruled in her favor because she and her husband never shared a bank account, and there was no evidence she knew about the unreported income. The IRS agreed she qualified for relief.

Tax Relief Options for Divorce and Death Situations

Beyond innocent spouse relief, several IRS programs can help during life transitions.

Offer in Compromise

• When it works: You can't pay the full debt due to financial hardship after divorce or death.
• For divorced taxpayers: Your income decreased significantly post-divorce, you didn't receive marital assets to cover tax debt, or your ex-spouse can pay, but you don't.
• For surviving spouses: Estate has no assets to cover debt, you're living on a limited income, or paying would create genuine hardship.
• Required documentation: Financial statements showing income and expenses. Asset valuations. Explanation of changed circumstances. For innocent spouse claims: Evidence of lack of knowledge or financial control.

In fiscal year 2024, taxpayers proposed 33,591 offers in compromise to settle existing tax liabilities for less than the full amount owed. The IRS ac­cepted 7,199 offers, amounting to $163.4 million, during the year.

Currently Not Collectible Status

• Temporary relief during adjustment: IRS suspends collection while you're experiencing financial hardship. Common after divorce, when income drops, or after a spouse's death, when the estate is in probate. Must provide detailed financial information showing inability to pay basic living expenses.

• How long it lasts: IRS reviews status periodically (typically annually). The collection statute continues running (10 years from assessment). Tax liens may still be filed even in CNC status.

• Best for: Temporary hardship expected to improve (job loss after divorce, estate settlement in process). Bridge period while establishing financial stability. Time to pursue other relief options (innocent spouse, OIC).

Professional Filing Help

• Estate and trust returns: Executors must file Form 1041 for estate income. Complex rules for income earned after death. Professional help is essential for estates over $100,000.

• Divorce year returns: You may need to file married filing separately to protect yourself. Amending prior joint returns may be necessary. A professional can analyze which filing status minimizes liability.

• When to hire professionals: If you find unfiled returns during a divorce or estate settlement. Known or suspected tax fraud by ex or deceased spouse. IRS notices received after a life-changing event. Estates with significant assets or income.

Forms and Deadlines for Tax Relief

• Form 8857 (Innocent Spouse Relief): Must file within 2 years of the first collection action for separation of liability relief. No deadline for equitable relief, but typically within 10 years. Include a detailed explanation and supporting documents.

• Form 656 (Offer in Compromise): Can file anytime before the collection period expires. Include $205 application fee (waivable for low-income). Provide complete financial documentation.

• Estate tax return (Form 706): Due 9 months after date of death. Extensions available. Required only if estate exceeds exemption amount.

• Final income tax return: Due April 15 of the year following death. Extensions to October 15 are available. Mark "deceased" on return with date of death.

Thorough documentation is critical: Many applications are denied because taxpayers don't provide enough proof that they were unaware of the tax issue or separated from financial decision-making.

Frequently Asked Questions

If my ex agreed to pay the tax debt in our divorce, why is the IRS coming after me? 

Divorce agreements don't bind the IRS. They can collect from either spouse on joint returns regardless of who agreed to pay. You need IRS relief (innocent spouse, separation of liability) in addition to divorce terms.

Am I responsible for my deceased spouse's business tax debt? 

Generally, no, unless you filed joint returns including the business income or signed business loan guarantees. The business debt is typically an estate obligation, not personal to the surviving spouse.

Will the IRS take my inheritance to pay my deceased spouse's tax debt? 

If the debt is joint (you filed together), yes. If it's solely your deceased spouse's debt, the IRS collects from the estate first. Assets that pass outside probate (life insurance, joint accounts, TOD accounts) may be protected depending on state law.

The Bottom Line: Tax Relief After Divorce or Death

Major life changes often reveal tax problems you didn't create and may not have known existed. Joint liability means the IRS can collect from you regardless of divorce agreements or whose fault the debt was.

However, relief options exist specifically for these situations—innocent spouse relief, separation of liability, and equitable relief can eliminate or reduce your liability if you act within deadlines.

Methodology

• Expert verification: All divorce and death tax analyses reviewed by Carissa Rawson, Senior Writer and Editor, for accuracy and practical applicability.

• Tax law sources: Innocent spouse relief from IRS Publication 971 and IRC Section 6015. Joint return rules from IRC Section 6013. Estate tax procedures from IRS Publication 559.

• Relief statistics: Approval rates and timelines from IRS Data Book and Taxpayer Advocate Service reports. Success rate data reflects both IRS published statistics and professional practice experience.

• Verification process: All claims are cross-referenced with current IRS publications and tax code. Cost and timeline estimates represent typical scenarios as of 2025.