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Innocent Spouse Tax Relief

Tax Resolution Team
Professional Service

When spouses file a joint tax return, both parties are equally responsible for paying the balance owed. Innocent spouse relief protects you from tax liability caused by your spouse's errors or fraud.

Key Takeaways

  • Innocent spouse tax debt relief allows the tax liability of a joint return to be placed on one spouse because of an understatement of tax due to erroneous items reported.
  • To qualify, the requesting spouse must be partially or fully unaware of the understatement of taxes erroneously reported on their joint return.
  • The IRS must determine that it would be unfair to place responsibility on the requesting spouse given the circumstances.
  • An erroneous item includes unreported income, incorrect tax deductions or credits, or false property basis claims.
  • There are three types of innocent spouse tax relief: innocent spouse relief, relief by separation of liability, and equitable relief.
  • CNC is one of the available options for the IRS Fresh Start Program.

What Is Innocent Spouse Tax Relief?

Innocent spouse relief is a form of IRS tax relief that can be utilized when individuals file a joint tax return but are later held liable for taxes owed due to erroneous items reported by their current or former spouse. Even if you divorce or are separated, the IRS will go after both spouses when attempting to collect unpaid taxes.

You may qualify if:

  • Your spouse operated a separate business independently from you
  • You did not personally benefit from the extra money that resulted from the tax deficiency
  • You did not share bank accounts or have access to the money generated from the activity

Types of Filing Statuses

Your filing status can impact your tax liability for that tax year. There are five main filing statuses:

Single Filing Status

If you are unmarried or legally separated from your spouse on the last day of the year, you may not qualify for any other type of filing status.

Married Filing Jointly

If you and your spouse decide to file a joint return, you will report your combined income and deduct your combined allowable expenses.

Married Filing Separately

If you are married, you and your spouse can choose to file separate tax returns. This may be beneficial if you only want to be responsible for your individual tax liabilities.

Head of Household

If you are unmarried, pay at least half of the living expenses for a household, and a qualifying person lives with you in the home.

Qualifying Widow(er) with Dependent Child

For two years following the death of your spouse, you may qualify to file as a qualifying widow(er) with a dependent child.

When Should You Apply for Innocent Spouse Tax Relief?

In general, there are three main qualifications when requesting innocent spouse relief:

  1. When you filed a joint return with your spouse, there was an understatement of tax due to erroneous errors attributable only to your current or former spouse.
  2. When you filed the joint return, you did not know and had no reason to know about the understatement of tax.
  3. Given the specific circumstances, it would be unfair to hold you liable for your spouse's understatement of taxes.

What is Considered an "Erroneous Item"?

Erroneous items include unreported income, incorrect deductions or credits, or false property basis claims that are reported on a tax return. An innocent spouse may qualify for complete relief if they were fully unaware of the erroneous item, or partial relief if they were unaware of only a portion.

3 Types of Innocent Spouse Tax Relief

Innocent Spouse Relief

Complete relief from responsibility for paying tax, interest, and penalties when your spouse made errors you were unaware of.

Relief by Separation of Liability

The IRS divides the tax debt between you and your spouse for separate payment, often used in cases of domestic abuse.

Equitable Relief

Relief when you don't qualify for the other types, based on fairness and specific circumstances of your situation.

How To Request Innocent Spouse Relief

If you think you may be eligible to request innocent spouse relief, there are four main steps:

1

Qualify for one of the three forms of innocent spouse relief

2

Apply for innocent spouse relief using Form 8857

3

Comply with the IRS investigation process

4

Appeal with the IRS if necessary using Form 12509

Important Forms

  • Form 8857: Request for Innocent Spouse Relief
  • Form 12509: Statement of Disagreement (for appeals)

Professional Representation Matters

The IRS denies many innocent spouse relief requests, but with proper representation, you can significantly improve your chances of success. Our experienced tax professionals understand the complexities of these cases and know how to present your situation effectively to the IRS.

Get Expert Help with Innocent Spouse Relief

Don't face the IRS alone. Our tax resolution specialists can evaluate your case, determine your eligibility, and guide you through the entire innocent spouse relief process.

Schedule Free Consultation