How to protect your spouse from your tax problems

You owe taxes to the IRS, but your spouse does not. Naturally, you want to keep your spouse’s finances from being drawn into your tax problem.

The last thing you want is the IRS prying into your significant other’s financial affairs. They married you, not the IRS.  Your tax problem begins and ends with you.  No one else should be forced to pay for your mistakes.

Fortunately, strategies can be put in place to not only keep your better half’s finances away from the IRS.

Here are five steps to protect your spouse’s finances from the IRS:

1.    File your tax returns separately.

You have the option of filing your tax returns separate from your spouse.  This is called married filing separately.  The taxes owed on a married filed separate return are yours alone.  Only you will sign the return, and it will contain only your income and your taxes, not your spouse’s finances, and only you will be responsible for repayment.

At the same time, filing separate returns eliminates direct disclosures to the IRS of your spouse’s income.  A typical request from an IRS collection agent is for your most recent personal tax return.  They want to see your return to know how much you earn, and will use it to determine how much you can repay.

If the return is filed jointly, it will have your spouse’s income on it. This will give an IRS collection agent information about where your better half works and how much they earn. Don’t do it; file your tax returns separately to keep your spouse’s income out of the equation.

Filing your tax returns separately will also allow your spouse to keep their tax refunds away from IRS seizure to pay your back taxes.

2.     Keep separate bank accounts.

A popular IRS collection method is requesting copies of your bank statements. They want to see what comes in and goes out every month, and use the statements to verify your income and living expenses.

If your bank accounts are joint with your spouse, then the IRS will have access to their finances, including their earnings and personal living expenses, and possible payment of your bills.

To solve the bank statement dilemma, open and use separate bank accounts – one for you and your earnings, another for your spouse’s. The IRS should have no access to the information in your spouse’s separate bank accounts.

The IRS also cannot garnish your other half’s bank account if it is separate, which protects their money from your tax problem.

3.     Put your earnings into your separate bank account.

If you commingle your income and living expenses with your spouse’s through a joint bank account, the IRS will see what your spouse earns, and use that income against you. They will calculate total household income for both of you, which can result in you paying more to the IRS from the benefit of your spouse’s income.

Put your earnings in your bank account, and your spouse should do the same with their account.

Separating your earnings into separate accounts will limit the IRS to calculating the amount you can repay to only your earnings.

Keep your spouse’s income separate from yours, and away from the IRS, by using a separate bank account.

4.     Pay bills separately from your spouse.

With your spouse now using a separate bank account for their earnings, your income now stands alone. The next step is to determine how your household bills are paid.

Do you pay all the housing and utilities, or just some?

Should your spouse pay for food and clothing?

Is it best to split your expenses down the middle?

What about credit cards?

The IRS has a chart of reasonable and basic living expenses, the Collection Financial Standards (CFS). This chart is designed to limit your living expenses and is used to determine the amount the IRS will allow you to pay. According to the chart, the less the IRS allows you to spend, the more they want you to pay back every month.

We want to make sure the expenses you pay out of your separate account match up to the IRS Collection Financial Standard charts.

5.     Reallocate bill payment to maximize IRS Collection Financial Standards (CFS). 

Your household bills should be reallocated between you and your spouse and paid every month according to the Collection Financial Standards. We want to make sure you claim your full share of the expenses the IRS will allow you.

To illustrate the importance of meeting the CFS’ limitations, let’s start with an example. Below, you will see how to keep the IRS out of your spouse’s finances and reduce the amount you have to pay them by using the CFS.

Your living expenses include the following:

  • Housing and utilities: $3,000 per month. Your spouse pays it all out of their separate account. Thus, you currently have no housing/utility expenses to claim against your income to the IRS.
  • Food, clothing, entertainment, personal care and travel: $1,300 per month, all of which you pay. 
  • Credit card debt payments: $650 per month. You pay for this out of your account.

Now, let’s compare that to IRS collection financial standards:

  • For housing and utilities, the IRS will give you up to $1,395 per month. Since your spouse pays it all, you have none to claim.
  • For food, clothing, and entertainment, the IRS allows $727 per month. You spend $1,300, so you are over by $573. The IRS will not allow you that excess amount as an expense.
  • For credit card payments, you will get zero out of the $650 per month you spend, as the IRS does not allow credit card payments in calculating how much you can repay them.

As your spouse is paying for housing and utilities, that’s $1,395 per month you are not spending that you could under the IRS Collection Financial Standard charts.

At the same time, according to the Collection Financial Standards, you’re spending $573 extra on food and clothing and $650 on credit cards that the IRS will not allow.  .

Your method of paying bills with your spouse does not match up to the IRS charts – not enough on housing/utilities, and too much on food/clothing/entertainment and credit cards.


Maximize who pays the bills according to the IRS collection financial standard allowances. For example:

  • Reallocate the payment of the housing/utilities. Rather than your spouse, you should start following IRS charts by paying up to $1,395/month, the amount the IRS will allow.
  • Cut down the amount you are spending on food, clothing, and entertainment to match the IRS allowance of $727/month.
  • Let your spouse pay your credit card debt of $650/month.

Now, you have $1,395 of IRS allowed living expenses you did not have before, and shed the $1,223/month on food/clothing and credit cards that did match the IRS charts.  Your spouse is paying that $1,223 now.

You have traded expenses on an almost even basis with your spouse. As a result, you better match up to IRS collection financial standard allowances.

You kept the IRS out of your spouse’s finances and reduced the amount you have to repay by $1,395 per month.  You accomplished this by reallocating expenses so you pay expenses that the IRS allows and your spouse pays the expenses the IRS does not allow.

When the IRS comes knocking on your door, and your spouse answers it, there should be no need for alarm. When you owe the IRS and your spouse does not, they should not be held responsible for paying your taxes back to the IRS.  Best practices can be used to keep your significant other out the crosshairs of the IRS. Separating your finances protects your spouse and allocating payment of bills according to the IRS charts ensures that you can have a manageable payment plan.

By Howard Levy

Collection Financial Standards, Innocent spouse

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By Howard Levy

Collection Financial Standards, Innocent spouse

Contact Howard

Ready to take the next step? Contact me through the link below.

How Can I Help You?