What is Innocent Spouse Relief? A Lifeline from the IRS
The intricacies of tax law can be daunting, and when you add the complexity of shared financial responsibilities in a marriage or a common-law partnership, navigating this maze can be even more challenging. One such complexity arises when an individual finds themselves facing tax liability due to their spouse or former spouse’s actions. Thankfully, the Internal Revenue Service (IRS) provides a provision known as “Innocent Spouse Relief” designed to provide some much-needed solace in these situations.
What is Innocent Spouse Relief?
The IRS understands that there are circumstances where holding one spouse responsible for the couple’s combined tax liability is unfair. This realization led to the creation of the innocent spouse relief provision in the tax code. Innocent spouse relief essentially allows one spouse (or former spouse) to be released from tax liability arising from the understatement of tax due to erroneous items of the other spouse on a jointly filed tax return.
This is a powerful provision because, typically, when a couple files taxes jointly, both parties are jointly and individually responsible for any tax, interest, or penalties incurred from that tax return, regardless of who earned the income.
Qualifying for Innocent Spouse Relief
Qualifying for innocent spouse relief involves meeting several specific conditions:
- Joint Return: You must have filed a joint return that has an understatement of tax.
- Error by Spouse: The understatement of tax must be due to incorrect items, such as unreported income or incorrect deductions, credits, or property basis, solely attributable to your spouse or former spouse.
- Innocence of Error: At the time you signed the joint return, you didn’t know, and had no reason to know, that there was an understatement of tax.
- Equitable Relief: Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax.
These conditions emphasize the importance of good faith on the part of the individual claiming relief. They didn’t know—and shouldn’t reasonably have known—about the understatement when they signed the return. Plus, given all circumstances, it would be unfair to hold them accountable for the liability.
Applying for Innocent Spouse Relief
Applying for innocent spouse relief involves completing and submitting Form 8857, Request for Innocent Spouse Relief, as soon as you become aware of a tax liability for which you believe only your spouse or former spouse should be held responsible. The IRS will then conduct an investigation to determine if the conditions for innocent spouse relief are met.
It’s important to note that the IRS will contact your spouse or former spouse—unless legally prohibited—to get their perspective on the claims made in the form. This is required by law and applies even in situations of domestic abuse or estrangement.
Innocent spouse relief is a valuable provision designed to protect spouses who were unknowingly involved in the submission of an erroneous joint tax return. However, the process can be complex, and each case is unique. If you find yourself in a situation where you believe you qualify for this relief, it’s recommended to seek the guidance of a tax professional or attorney who specializes in tax law.
The provision itself embodies the spirit of fairness in tax administration and the understanding that a tax liability, incurred unknowingly due to the actions of a spouse or former spouse, should not unduly burden the innocent party.
Call us …………………………
Need More Information?
At the Law Office of Daniela Romero, we believe in relationships that are based on trust. Before we work together, we would like to get to know you and we would like you to get to know us. We want you to be sure you are the right fit for us and that we are the perfect fit for you. This will allow you to be completely comfortable sharing intimate and difficult details of your case, so we can offer you representation to the fullest extent of the law. Call us today to set up a free consultation.