Innocent Spouse Relief (Including separation of liability and equitable relief)
Many married taxpayers choose to file a joint income tax return because of certain benefits this filing status provides the taxpayer. However, by filing a joint return, both taxpayers are jointly and severally liable for such taxes and any tax, interest or additional penalties resulting from the joint return, even if you later divorce. This could present problems when taxpayers are not totally up front with each other. Luckily, innocent spouse relief is available to taxpayers. Innocent spouse relief will be essential when one spouse does not know about all the activities of another taxpayer that they are filing a tax return with.
Information and Applying for Innocent Spouse Relief
The joint and several liability means that each taxpayer is legally responsible for all taxes owed. Therefore, both spouses usually are held responsible for all tax due even if one spouse earned all the income or improperly claimed deductions or credits. This is also true even if the divorce decree states that a former spouse will be responsible for the entire amount due on previously filed joint returns. In some cases, however, a spouse can get relief from this joint and several liability by going through the innocent spouse relief process.
Currently, there are three types of relief from joint and several liability for spouses who filed joint returns:
- Innocent Spouse Relief provides relief in situations that have assessed additional taxes if your spouse or former spouse stated income, stated incorrectly or improperly claimed deductions or credits.
- Relief by Separation of Liability If owed additional taxes prorated between you and your former spouse or current spouse from whom you are separated, because any departure was not properly declared in the joint statement. The amount of taxes that is assigned to you is the amount which you are responsible.
- Equitable Relief may apply if you do not qualify for innocent spouse relief or separation of liability due to any item incorrectly stated in the joint tax return and is generally attributable to your spouse. You may also qualify for equitable relief if declared correct amount of tax on the joint return, but tax the return was not filed.
Note: You must request relief innocent spouse relief or separation of liability no later than 2 years after the date on which the IRS first attempted to collect the taxes owed . For equitable relief, you have to apply for relief during the time the IRS has to charge you the tax.
Tax Refunds and Innocent Spouse Relief
If you wish to request a refund of the tax you paid, then your request must be made within the period of time that is given to you to claim a refund, which is generally three years after the date on which the statement is submitted to two years after payment of the tax, whichever is later. To see additional restrictions on redemptions available under the innocent spouse relief, equitable relief, and based on the laws of community property relief, see Publication 971, Innocent Spouse Relief (Innocent Spouse Relief). No refunds are available on relief by separation of liability that happens due to claiming innocent spouse relief.
You must meet all the following conditions to qualify innocent spouse relief:
- Taxpayer filed a joint return where an understatement of tax (deficiency), which is attributed only to erroneous items indicated by your spouse. A “wrong item” includes income received by your spouse, but was omitted from the joint return. Deductions, credits and property bases are also considered as erroneous items if they are incorrectly presented in the joint statement.
- You demonstrates that when signing the joint tax return you did not know and had no reason to know, that there was an understatement of tax; and
- Taking into account all the facts and circumstances, it would be unfair to consider you responsible for the understatement of tax.
To qualify for the ” relief by separation of liability “ , must have filed a joint return and meet one of the following requirements when applying for relief:
- Are divorced or legally separated from the spouse with whom filed a joint return,
- Taxpayer is a widower or
- It has not been in any member of the household of the spouse with whom you filed the joint return for the 12 month period ended on the date of the time Form 8857 Application for Innocent Spouse Relief was filed.
If at the time you signed the joint return and had actual knowledge of what caused the error on a joint return, you are not entitled to relief by separation of liability.
Publication 971 , Innocent Spouse Relief
If you do not qualify for “innocent spouse relief” or the “relief by separation of liability,” you may qualify for the “equitable relief” . To qualify for this relief, must show that, taking into account all the facts and circumstances, it would be unfair to hold him responsible for the understatement or underpayment of taxes. Also, must meet other requirements explained in Publication 971 , Innocent Spouse Relief.
Requesting Innocent Spouse Relief
To request innocent spouse relief, relief by separation of liability or equitable relief, must submit to the IRS on Form 8857. If you want relief from joint and several liability, the IRS is required to notify the spouse who filed the joint statement on your application and allow you to provide information to consider about your claim.
If you lived in a state with laws of community property and did not submit a statement as “married filing jointly”, you may still qualify for relief. The states with the laws of community property are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. See Publication 971, in English, for additional information. Do not confuse the relief of joint and several liability to the claim of the injured spouse relief. A taxpayer is considered an “injured spouse” if filing a joint return and all or part of your share of the refund was, or will be, applied to federal or state taxes owed, outstanding pension for minor children, not tax federal debt (as a student loan) owed by the spouse who filed the joint return.
IRS Tax Information for Innocent Spouses
- Introduction to Innocent Spouses – This publication explains these types of relief, who may qualify for them, and how to get them.
- Explore if you are an Eligible Innocent Spouse – In order to qualify for Spousal Relief, you must meet certain conditions. Information is provided to help you determine if you qualify for relief.
- Three Types of Relief – In some cases, a spouse will be relieved of the tax, interest, and penalties on a joint tax return. Three types of relief are available.
- Innocent Spouse Relief – Publication 971 – There are three types of relief for the innocent spouse.
- Applying for Innocent Spouse Relief – Find Form 8857 including Form 8857 Fillable and Spanish Versions.
- Where to Mail Completed Form 8857 -Improve Service by mailing innocent spouse claims directly to Cincinnati.
- Innocent Spouse Questions & Answers – This section answers questions commonly asked by taxpayers about innocent spouse relief.