Reply To: Offers-in-Compromise – non liable spouse

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#43974
Brian Barto
Participant

1. I will assume you are in a NOT community property state.
2. Although the Non-debtor spouse will NOT be required to disclose her assets, she WILL be required to disclose her income. Does she have any income? The non-debtor spouse’s income is required in order for the IRS to do an allocation of joint expenses between the two spouses.
3. The liable spouse would take his % of the total household income, and be allowed to then deduct his % of the “Joint household expenses” – If his income accounts for 80% of the total household income, he would be able to take 80% of household expenses for the items such as Food/clothing and Housing/utilities. I would think you can simply submit the bills that were paid by the non-liable spouse as proof of household expenses with an explanation. I don’t think it makes difference that he “gives” the money to his spouse. You would just need to show that the money is actually going towards household expenses.
4. For certain items such as automobile, he could take the expense for just his vehicle, and the expense for his % of the health insurance (if they are both covered on the policy)
5. You mention he is “current on his filings” – All tax returns filed through 2019? AND Estimated taxes paid for 2020? The estimated taxes will be important for compliance.