When are you not liable for your spouse's taxes?

Each year, many married taxpayers are surprised to see that an expected refund check is a bit smaller than anticipated. This is often the result of an offset for an outstanding liability of some sort attributable to one spouse, even though the other spouse has no connection to the obligation.

Here's how it happens: Congress has authorized what's known as the Treasury Offset Program through the Financial Management Service (FMS). Under the Offset Program, refunds may be reduced to pay any past-due child or spousal support, federal non-tax debts (such as past due or defaulted student loans), state income tax obligations, or unemployment compensation debts owed (usually due to amounts paid out and later discovered to be fraud).