Innocent Spouse Relief: Do You Qualify?

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Written by Amber Westover | Last Updated November 7th, 2019
Amber is currently a Digital Marketing Strategist at Best Company. She is passionate about learning and researching. Her interests include traveling, eating sushi, painting, and reading Agatha Christie novels.

(This article is 1 of 15 chapters in The Definitive Guide to IRS Debt Forgiveness. Return to the guide to get the full explanation of IRS Debt Forgiveness.)

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Betrayal. Fear. Uncertainty. You recently discovered that your spouse, without your knowledge, lied on your joint tax return. Now you find yourself facing legal action and drowning in a sea of tax debt. Luckily, if you are faced with this devastating situation you have options.

According to Forbes, 95 percent of married couples jointly file taxes. This includes many benefits such as a large standard deduction, certain tax credits, and potential tax breaks due to the higher combined income. However, filing jointly has underwritten consequences. Both spouses are held liable for the accuracy of the tax return. Furthermore, both spouses are equally responsible for owed taxes. Subsequent divorce does not remove responsibility.

What Is Innocent Spouse Relief?

However, special circumstances may allow you to qualify for innocent spouse relief. Through this option, you will not be held responsible for inaccuracies on your tax return and the attached consequences (penalties, owed taxes, or interest). The aforementioned consequences will be solely attributed to your spouse (or former spouse).

Do You Qualify?

The IRS outlines three mandatory requirements for qualification:

  1. Your spouse is solely responsible for the error. Your spouse either omitted income or incorrectly reported a tax deficiency, other deductions, credits, etc.
  2. You did not know about the error. When you signed the tax return you did not know about the error and had no reason to know about it.
  3. It would be unfair to hold you responsible for the error.

A variety of factors will be taken into consideration such as your background and history. Suspicious behavior, such as transferring assets to avoid taxes, will be investigated and likely disqualify you. If you had any knowledge of the inaccuracies you will not qualify for this relief. In addition, if you failed to ask reasonable questions about the tax return before signing the IRS will most likely disbelieve your innocence.

How Do You Apply?

Innocent Spouse Relief is filed through Form 8857. The form asks specific questions regarding your situation. You must describe your involvement with your marital finances and the tax preparation process, your financial situation, and any history of domestic violence or spousal abuse (concerning the relevant spouse). The final portion of the form allows you to provide additional information about your circumstances.

This form is submitted to the IRS separate from your tax return by mail or fax. Innocent spouse relief requests must be filed within two years and only applies to joint tax returns. It may take up to six months for a final decision to be made.

Tax resolution companies such as Tax Defense Network will help you file for innocent spouse relief. They also offer free consultations to determine if this is the best option for your situation.

What if You Don't Qualify?

It is critical to note that not everyone qualifies for this relief. If you gain additional information, you can refile your claim.

If you do not qualify for innocent spouse relief you may be eligible for separation of liability relief, equitable relief, or injured spouse relief. You can review all your options with a top ranked tax debt relief company.

 

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