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Innocent Spouse Relief

Innocent spouse relief

When individuals file a joint tax return, each spouse is equally liable for all tax, penalties and interest that come about from that particular year. The IRS or states can legally go after both spouses or just one spouse for the entire tax amount that is due even if the couple is divorced and the divorce decree states that one individual is responsible for the taxes owed.

Types of Innocent Spouse Tax Relief

The IRS created innocent spouse relief because it realizes that there are times when it would be unfair to hold both joint filers equally liable for the tax liability that was created. There are three forms of spouse relief that will allow one spouse to get out of paying their spouse or ex-spouses tax. If an individual does not qualify for one, it is possible that they will qualify for another type of relief.

Innocent Spouse Relief (Original/Classic type of tax relief)

This was the original type of innocent spouse relief. This is an improved version from a prior innocent spouse law which has since been split into this section and two others. This form of relief can completely relieve one spouse's responsibility for paying any of the understatement of taxes owed. Individuals must meet specific criteria in order to qualify.

Under this type of relief you can still qualify even if you're still married and living with the spouse whose fault it was for having taxes reported erroneously. In order to qualify for this type of relief your spouse or former spouse generally needs to be responsible for the tax, penalties and interest that is due. You will not qualify for this form of relief if you are the cause of tax liability that was created.

Separation of Liability

Under the separation of liability election under innocent spouse relief, the underpayment of tax can be separated between you and your spouse. This means that different amounts can be allocated to each spouse instead of both of them being held equally liable for the entire amount of tax owed. Under this form of relief there are no refunds, so if you have already paid the amount owed, there will be no way to get it back. Under separation of liability there must be unpaid taxes that were caused from mistaken items. In order to qualify for this type of relief you must have filed a joint return with the person you seek the relief. When you make the actual filing for separation of liability you must meet either of the two following requirements:

-You are not married to, or you are legally separated from the spouse with whom you seek this form of tax relief. If you are widowed it is considered that you are no longer married.

-You were not a member of the same household with the spouse that you filed the joint return with at any time during the twelve month period ending prior to the date you make or made the filing for this type of tax relief. Being a member of the same household is defined by the IRS as living apart and is estranged.

IRS Equitable Relief

If an individual does not qualify for the prior two types of relief, it is possible that they could qualify for equitable relief. Unlike the other types of relief, equitable relief allows individuals to apply if they have either an understated tax or underpaid tax. This relief was created to cover people that don't qualify for first two types of relief but it would still be unfair to hold them liable for the tax amount owed.

Innocent Spouse Relief Frequently Asked Questions (FAQs) >>