‘Til death do us part?… This is not the case for many marriages and unfortunately, some people are left as a victim of their former spouse’s tax decisions. Many people are unaware of the option for innocent spouse relief. If you are married and file a joint return with your spouse, and you believe that your spouse has underreported income or claimed incorrect deductions, you may be able to get relief from joint and several liabilities for any resulting tax deficiencies.
In this post, we’ll explain what innocent spouse relief is, and guide you through the qualification process. Keep in mind that every case is unique, so if you think you may qualify for innocent spouse relief, it’s best to speak with an experienced tax attorney.
Innocent spouse relief and what it does for tax payers
When a married couple files a joint tax return, they’re both responsible for the accuracy of the information and any tax liability. This is true even if the couple later gets divorced. If one spouse or former spouse doesn’t pay what they owe, the other may be held liable.
Most commonly, the error involves unreported income or an inflated deduction. The rule provides relief from responsibility for paying tax, interest, and penalties resulting from erroneous items reported by the applicant’s current or former spouse on their joint return.
Innocent spouse relief is a way for taxpayers to be relieved of responsibility for paying taxes on a joint tax return when their spouse or former spouse caused the error. Innocent spouse relief only applies to individual income or self-employment taxes. To qualify, taxpayers must meet certain conditions and requirements set by the IRS.
Read more about how your spouse’s tax debt can affect you.
There are three types of innocent spouse relief
There are three types of innocent spouse relief:
1. Innocent Spouse Relief – This type of relief is available to taxpayers who filed a joint return, and didn’t know, and had no reason to know, that their spouse or former spouse misreported information or omitted income.
2. Separation of Liability Relief – This type of relief is available to taxpayers who are divorced, legally separated, or no longer living with their spouse when they file a request for relief. It can also be granted to taxpayers who didn’t file a joint return, but would have if not for a divorce or legal separation that occurred after the return was due.
3. Equitable Relief – This type of relief is available to taxpayers who don’t qualify for innocent spouse relief or separation of liability relief, but who nonetheless
believe that it would be unfair to hold them liable for misreported information or omitted income.
The IRS considers fairness in determining whether to provide innocent spouse relief. It examines your marital status, as well as your tax error and whether your spouse has abandoned you.
Individual shared responsibility payments and certain kinds of employment taxes are not eligible for innocent spouse relief.
What are the conditions for innocent spouse relief?
To qualify for innocent spouse relief, you must meet all the following conditions:
- You filed a joint tax return that has an underpayment.
- You didn’t know, and had no reason to know, that there was an underpayment when you signed the return.
Taking into account all the facts and circumstances, it would be unfair to hold you liable for the underpayment or any resulting interest or penalties on the tax liabilities.
You must also meet one of the following conditions:
- You’re divorced, separated, or no longer living with your spouse.
- Your spouse died.
It’s important to note that you won’t be eligible for innocent spouse relief if you give assets to your spouse in order to avoid paying taxes. You won’t qualify, for example, if you offer your spouse your automobile as a gift so he or she does not have to pay taxes on the sale.
How do I apply for innocent spouse relief?
By requesting innocent spouse relief, you can be relieved of responsibility for paying tax, interest, and penalties if your spouse did something wrong on your tax return.
If you think you might qualify for innocent spouse relief, you can request it by filing Form 8857 with the IRS. You don’t need to pay a fee to request relief, but you may need to pay a professional to help you complete the form.
If you want to request innocent spouse relief, you must file Form 8857 within two years from the date the IRS first began trying to collect the tax from you. For example, if the IRS sent you a notice of deficiency on September 1, 2018, you would have until August 31, 2020, to file Form 8857.
If you’re requesting relief from liability for interest and penalties, you must file Form 8857 within 10 years from the date the IRS first began trying to collect the
tax. For example, if the IRS sent you a notice of deficiency on September 1, 2018, you would have until August 31, 2028, to file Form 8857.
Once you’ve filed Form 8857, the IRS will review your request and make a determination. If it approves your request, you’ll no longer be held liable for the taxes in question. If the IRS denies your request, you can appeal the decision.
What if I can’t pay the taxes I owe?
If you owe taxes and can’t pay them in full, don’t despair. The IRS has a number of payment options available, including installment agreements and offers in compromise. You can also consider using a tax relief service to negotiate with the IRS on your behalf.
The bottom line is that you shouldn’t let the fear of not being able to pay keep you from completing your tax return and filing it on time. The sooner you file, the
sooner you can explore your payment options and find a solution that works for you.
Read more about requesting a partial payment plan from the IRS.
What are the benefits of qualifying for innocent spouse relief?
If you qualify for innocent spouse relief, you will no longer be held liable for the taxes in question. This means that you will not have to pay any back taxes, interest, or penalties. In some cases, you may also be able to have your tax debt forgiven entirely. Qualifying for innocent spouse relief can provide much-needed financial relief and help you get back on track.
What are the consequences of not applying for innocent spouse relief?
If you don’t apply for innocent spouse relief, and you’re liable for the taxes in question, you may be subject to collection actions by the IRS. This can include wage garnishment, bank levies, and property seizure.
Not only can this be financially devastating, but it can also be emotionally difficult. If you think you might qualify for innocent spouse relief, it’s important to act quickly and file Form 8857.
How can I get more information about innocent spouse relief?
If you have questions about innocent spouse relief or need help completing Form 8857, you should contact a tax professional. They can help you determine if you qualify and assist you with the application process. You can also find more information on the IRS website.
No matter what your situation is, if you owe taxes and can’t pay them, it’s important to take action. The sooner you file your tax return, the sooner you can explore your payment options and find a solution that works for you. And if you think you might qualify for innocent spouse relief, don’t hesitate to contact a tax professional for help.
Other types of relief available to innocent spouses
If you don’t qualify for innocent spouse relief, there are other types of relief available. These include separation from liability relief and equitable relief. Both options require an 8857 form to be filled out. But they each have additional qualifications to meet in order to be approved.
To learn more about either option, speak to an experienced tax professional to see if you qualify.
When is it time to speak to a tax attorney?
If the IRS has begun collection action against you, it might be time to speak to a tax attorney. An attorney can help you negotiate with the IRS and try to reach a resolution that works for you. They can also help you explore your options and determine if you qualify for any type of relief.
Read more about when it is time to hire a tax attorney.
Talk to a tax attorney today
If you have questions about your tax liability or need help completing Form 8857, contact a tax attorney today. An experienced tax attorney can help you determine if you qualify for innocent spouse relief and assist you with the application process. They can also help you negotiate with the IRS and explore payment options if you’re unable to pay your taxes in full.
This article is not intended to be legal advice. You should always consult with an experienced tax professional to discuss your specific situation.
Damiens Law can provide much-needed guidance and support during this difficult time. Don’t go through it alone. Contact us online or call (601) 957-9672 to schedule a free consultation.
