Unpaid Tax Debt: Can You Inherit Back Taxes (Everything You Need To Know)

When a loved one passes away, taxes and debt are the last things on your mind. However, unpaid tax debt is an important topic that must be addressed. When a family member passes, debtors waste no time descending upon the family and demanding debts are repaid.

Of course, this is a trap. But, what happens when it’s the IRS that’s knocking on the door?

In this article, we’ll examine:

  • What statute of limitations are and what is tax debt’s limit
  • Who can inherit your tax debt
  • Innocent spouse relief 
  • How to minimize taxes even though you owe tax debt to the IRS
  • What happens to tax debt when one passes away
Let’s get into it.

Statute Of Limitations On Tax Debt

As we mentioned in this article, the general rule of thumb is that tax debt has a statute of limitations of 10 years. A statute of limitations simply means how long the parties involved have to settle a dispute before it’s considered that too much time has passed. 

Though there are several important exceptions you should be aware of, the IRS most likely won’t be able to make you repay back taxes after 10 years.

Can My Family Inherit My Tax Debt? Can I Inherit My Spouse’s Tax Debt?

In short, no, your family isn’t liable for your unpaid tax debt. However, the IRS will still come after your assets (such as your home or children’s inheritance). 

TaxRise understands that thinking about your death is uncomfortable, however spending time right now setting up a few logistical things can save your loved ones a lot of time and energy.

Here’s what you must do to set your loved ones up:

1. Filed jointly with spouse: If you file jointly with your spouse, your spouse is liable for any tax debt incurred. There is an exception to this rule, called innocent spouse relief.

If your spouse can make a reasonable claim of not knowing about filing errors and having no reason to know about them, the IRS may not come after the spouse. 

We have an in-depth article about innocent spouse relief here.

If your loved one passed away and you believe you qualify for innocent spouse relief, then check out TaxRise’s free tax consultation. We understand that this is a difficult time for you and your family. If you need to take settling back taxes off your plate, we are here to help.

2. Heir’s inheritance: Though the IRS can’t come after your children or heirs once you pass, any assets you leave behind are fair game. 

Any outstanding tax liabilities will need to be paid before your heirs can receive their inheritance. If you don’t have a will in place or a plan for your tax debt, this will leave an enormous legal mess for your family. The best thing you can do is to plan your estate and meet with tax professionals.

What Happens To My Tax Debt When I Die?

As we already mentioned, the IRS has full legal rights to come after any assets you leave behind for your family.

While planning your estate, be sure to speak with a tax professional. Minimizing as many taxes as possible is within reach. Speaking with a professional tax relief company such as TaxRise will help reduce stress. 

The Takeaway

If you need to get rid of tax debt fast, check out TaxRise’s free tax consultation. From this informative call, you’ll be able to determine if you qualify for the Fresh Start Program and which tax relief program will work best for your unique situation. 

We represent taxpayers who are audited by the IRS. We help advocate for the best relief outcome possible.

TaxRise has helped thousands of taxpayers just like you resolve their tax issues and erase their tax liability. Book your call and get started today!

Write a comment