Alabama Administrative Code › Title 810 - ALABAMA DEPARTMENT OF REVENUE › Chapter 810-3-27 - INDIVIDUAL TAXPAYERS' RETURNS › Section 810-3-27-.01 - When An Individual Return Is Required

Current through Register Vol. 42, No. 9, June 28, 2024
(1)
(a)
			 Each resident shall file a return for each tax year if single or married but
			 not living with husband or wife, and having for the year a net income (as
			 defined in §
									40-18-12) of $1,500 or more; or if married and living with husband or wife and having a
			 net income of $3,000 or more for the tax year.
(b)
1. A
			 husband and wife, each having income for the tax year, may file separate
			 returns reporting the income and deductions of each, or they may elect to file
			 a joint return reporting their combined income and deductions. A joint return
			 may only be filed when -
(i) both spouses
			 have the same tax year (except when one spouse dies during the tax year),
			 and
(ii) both spouses were
			 residents of Alabama for the tax year.
2. A joint return must be signed by both
			 husband and wife.
3. The election
			 to file a joint return is irrevocable after the due date of the return for any
			 tax year.
4.
(i) If a husband and wife file a joint
			 return, they shall be jointly and severally liable for the tax shown by said
			 return, or as may be determined by the Department to be due by them.
(ii) Innocent Spouse Rule.
(I) General Rule. For tax years beginning
			 after August 10, 1987, if a joint return was made for such tax year and -
I. on such return there is a substantial
			 understatement of tax attributable to grossly erroneous items of one spouse,
			 and
II. the other spouse (innocent
			 spouse) establishes that in signing the return such innocent spouse did not
			 know, and had no reason to know, that there was a substantial understatement,
			 and
III. taking into account all
			 the facts and circumstances, it is inequitable to hold such innocent spouse
			 liable for the deficiency in tax for such tax year attributable to such
			 substantial understatement by the other spouse, then the innocent spouse shall
			 be relieved of liability for tax (including interest, penalties and other
			 amounts) for such tax year to the extent such liability is attributable to such
			 substantial understatement.
(II) Definitions. For purposes of this
			 subsection (ii):
I. the term "grossly
			 erroneous items" means, with respect to any spouse -
A. any item of gross income attributable to
			 such spouse which is omitted from gross income, and
B. any claim of a deduction, credit, or basis
			 by such spouse in an amount for which there is no basis in fact or
			 law.
II. the term
			 "substantial understatement" of tax means any understatement which exceeds
			 $500. (If the understatement of tax is not more than $500, the innocent spouse
			 is not relieved of joint liability.)
III. the term "understatement" means the
			 excess of the amount of tax required to be shown on the return for the tax year
			 (reduced by any credits allowed by §
													40-18-21) over the amount shown on the return as filed by the taxpayer (reduced by any
			 credits allowed by §
													40-18-21).
IV. the term "preadjustment
			 year" means the most recent tax year of the innocent spouse ending before the
			 date an assessment is issued pursuant to §
													40-18-40.
			 (If the assessment is not issued in the first year following the year of the
			 understatement, the "preadjustment year" will be a year which occurs after the
			 year of the understatement.)
V. the
			 term "inequitable" means the innocent spouse received no benefit, directly or
			 indirectly, from the understatement by the other spouse.
(III) Limitations And Exceptions.
I. This subsection (ii) shall apply only (the
			 innocent spouse will be relieved of joint liability for the understatement by
			 the other spouse) if -
A. the adjusted gross
			 income of the innocent spouse for the preadjustment year is more than $5,000
			 but not more than $20,000, and the understatement is greater than ten percent
			 (10%) of such adjusted gross income, or
B. the adjusted gross income of the innocent
			 spouse for the preadjustment year is greater than $20,000 and the
			 understatement is greater than twenty-five percent (25%) of such adjusted gross
			 income.
(A) If the innocent spouse is married
			 to another spouse at the close of the preadjustment year, the innocent spouse's
			 adjusted gross income shall include the income of the new spouse, whether or
			 not they file a joint return.
II. The limitation in subsentence I. above
			 shall not apply to any liability attributable to the omission of an item from
			 gross income. (The relief from joint liability for an innocent spouse may be
			 available, regardless of the ratio of the understatement to the innocent
			 spouse's adjusted gross income in the preadjustment year if the understatement
			 resulted from the omission of an item of gross income by the other
			 spouse.)
(c) If the taxable period is less than twelve
			 months a return is required if the net income is more than the exemption
			 computed for the fractional part of the year. See Reg.
			 810-3-19-.02(3) for proration of exemptions.
(d) If
			 the taxpayer is unable to make a return, his duly authorized agent or guardian
			 is required to file the return.