Both filers are normally accountable for the tax bill on joint tax returns. Innocent spouse relief, on the other hand, is a means to avoid paying additional tax to the IRS if your spouse or ex-spouse made major mistakes on your joint tax return. Here’s how the innocent spouse relief program works, its types, how to qualify, and how to apply for it.
Innocent Spouse Relief
This is a common occurrence in your favorite streaming programs. After dusk, the feds storm a mansion and drag the husband or wife out in handcuffs. (It’s a plus if you can loot the house!) Their partner had been in a large tax evasion scam worth millions or billions of dollars, much to the astonishment of the spouse.
How might something happen in real life without your knowledge? That is your answer if you and your spouse submitted a joint tax return and signed it.
While this is an extreme case, it is all too common for a spouse to be about their husband or wife’s suspected tax actions. Most of the time, it’s for a minor glitch that can be simply fixed; you correct it, and it’s no big problem.
However, there are instances where fraud has been willfully perpetrated, and the spouse who has been in the dark about what happened must attempt to explain the situation to the authorities despite the fact that they have no knowledge of what happened. Knowing that your spouse has deceived you and that you are expected to clean up the mess could also imply that you are responsible for their obligations, which can be a very painful and embarrassing experience.
Fortunately, the IRS has an Innocent Spouse Relief provision. You will be absolved of any atrocities done by your spouse if you meet certain criteria. Knowing that at least some of the devastation will be taken off your shoulders is a big comfort. We have assisted other wronged spouses and can assist you as well.
Types of innocent spouse relief
If you don’t qualify for innocent spouse relief, you may have two other options.
#1. Separation of liability relief
The IRS divides the tax bill between you and your ex, with each of you paying your own portion. To be eligible, you must be divorced, officially separated, or widowed, and you must not have lived with the individual for the previous 12 months.
#2. Equitable relief
If you didn’t file a joint return but are responsible for your spouse’s mistakes because you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), this may be a possibility. Alternatively, if your tax return was valid but the tax was not paid, you may be eligible for this relief.
The theory of innocent spouse relief
Many married taxpayers choose to file joint returns because of the perks that come with it. Filing a joint return, on the other hand, imposes the additional burden of both parties being accountable for the tax payable. Married taxpayers who file jointly are also jointly liable for any additional tax, fines, or interest with the account, according to the IRS code.
This is a legal notion as joint and several responsibilities, which means that the spouses are collectively accountable for any tax liabilities but can also be individually responsible (severally).
From a practical sense, the IRS lacks the resources necessary to determine who is an innocent spouse on its own. This would necessitate the IRS reviewing thousands upon thousands of joint collection accounts and determining who should be assessed an increase in responsibility on an individual basis.
There are two ramifications to this. First, rather than the IRS, it leaves the duty of determining how to pay the liability on the parties. Second, because both parties are accountable, the IRS can pursue collection action against any of them rather than just one spouse.
The IRS policy of pursuing either spouse for an unpaid debt has been upheld by the courts. Even if both spouses agree. The IRS may not attempt to collect from one spouse before pursuing the assets of the other.
The difference between innocent spouse relief and injured spouse relief
The following is the distinction between an innocent spouse and cut spouse relief: The purpose of innocent spouse relief is to delegate responsibility for tax payment. Injured spouse relief permits an injured spouse to reclaim his or her share of a joint tax return’s refund.
If all or part of your portion of a combined tax refund was (or will be) allocated toward taxes your spouse owes for separate, past-due federal or state taxes, child or spousal support, or student loan debt, the IRS may offer the injured spouse relief.
What Is Form 8857: Request for Innocent Spouse Relief?
The Internal Revenue Service (IRS) tax form Form 8857: Request for Innocent Spouse Relief is by taxpayers to request relief from a tax burden involving a spouse or former spouse. Couples who file a combined tax return are usually jointly accountable for any tax debt. Even if they are divorced. Both partners will be liable for additional taxes due to unreported income and erroneous deductions or credits.
Even if a divorce decision indicates that only one person is accountable for the tax. The IRS will nevertheless consider both parties to be jointly and severally liable for the tax. If there is a balance. A spouse or ex-spouse must normally file Form 8857 within the time limit the IRS has to collect the tax. In most cases, this time is ten years from the day of the tax liability start. If you want a credit or refund, you must file your request within three years after the date the original return was filed. Or two years after the tax is, whichever comes first.
Who Can File Form 8857: Request for Innocent Spouse Relief?
The taxpayer requesting relief should complete Form 8857: Request for Innocent Spouse Relief. As soon as they become aware of a tax obligation that should be wholly the responsibility of the other spouse or ex-spouse. The filing of Form 8857, on the other hand, does not guarantee that the asking taxpayer would be eligible for relief. The following are some of the requirements:
- Filing a joint return with an understatement of tax.
- Tax due to a spouse’s erroneously listed income or deductions
- The determination that it is unfair to hold the requesting taxpayer liable for the understatement
If a taxpayer receives the notification of the denial of their request, they have the option to appeal the decision.
How Long Does it take to Get Innocent Spouse Relief?
- 6 months
How long will it take to complete the process? It is possible that it will take up to six months for the Internal Revenue Service (IRS) to make a determination after receiving a Request for Innocent Spouse Relief on Form 8857. The Internal Revenue Service will contact the spouse who did not request the refund while it is in the process of requesting tax information from you.
Is Innocent Spouse Relief from Joint Liability?
Taxpayers who believe they should be exempted from their joint tax liability may submit an application for innocent spouse relief to the Innocent Spouse Program, which will then assess and evaluate the application. When two people file a joint tax return, they are considered to have implicitly consented to the establishment of a joint tax liability under both federal and state income tax rules.
Can You Appeal Innocent Spouse Relief?
You have the right to file an appeal if any of the following conditions are met: You submitted an innocent spouse claim to the IRS, and they either denied it or didn’t completely approve it. You submitted a Request for Innocent Spouse Relief (Form 8857) in PDF format. Your inquiry pertains to an unpaid tax that was recorded on your return and/or an extra tax that was determined by the IRS.
What is Not a Type of Innocent Spouse Relief?
Under some conditions, one partner will sign both of their names on the tax return (or file it electronically without the consent of the other spouse). In situations like these, the spouse may assert that they did not file a return with the relevant authorities. This is not a request for a deduction for an innocent spouse; rather, it is an admission that the person did not file their tax return.
How to File Form 8857: Request for Innocent Spouse Relief
If a taxpayer seeks relief, there are specific measures they must follow. They should first file the form as soon as they learn that the spouse or former spouse has a tax liability. The IRS will most likely issue you a notice of your tax liability.
The time limit for requesting equitable relief has been extended by the IRS since July 25, 2011. Even if they do not have the requisite paperwork immediately available. The taxpayer should submit Form 8857 as soon as they become aware of the mismatch. A taxpayer’s spouse or ex-spouse will be notified of the pending request once the taxpayer submits Form 8857. Additionally, taxpayers should be aware that receiving an IRS determination after filing can take up to six months.
How do I file for innocent spouse relief with the IRS?
Fill out IRS Form 8857 to request innocent spouse relief. (If you want, you can send a signed written statement with the same information instead of the seven-page form.) The IRS will determine the amount of tax you must pay.
There are a few factors to keep in mind if you think you could be eligible for innocent spouse relief:
- The IRS is to tell your spouse or ex-spouse that your innocent spouse is relieved. It will also allow your spouse to provide information regarding your claim.
- The IRS will collect the tax, interest, and penalties from your spouse or ex.
- If you already paid some or all of the tax bill, the IRS will refund only the tax payments you made with your own money.
- If any part of the tax, interest, and penalties doesn’t qualify for innocent spouse relief, both of you are liable for that portion of the bill.
- Some taxes, such as individual shared responsibility payments and certain kinds of employment taxes, don’t qualify for innocent spouse relief.
Who Qualifies for Innocent Spouse Relief?
To be eligible for innocent spouse relief, the couple must obviously file a joint return. Otherwise, the spouse must complete three requirements in order to receive relief.
- One of the taxpayers believes the understatement of tax was due to an error found later by one of the spouses.
- There is evidence that one spouse did not know about the error.
- One spouse believes he or she should not be held responsible for the understated tax once all the facts and circumstances have been taken into account.
Keep in mind that the entire argument is based on the concept of reason to know rather than actual knowledge. Also, tax is when the total tax should be higher than the amount on the return. Unreported income, mainly from investments, is the most common reason for understated taxes.
Understated taxes can also be caused by wrongly computing deductions, reporting inaccurate credit, or reporting on the wrong tax base. The amount of time a spouse has to request relief is limited. The request for Innocent Spouse Relief, IRS Form 9968, must be made within two years of the date of the first attempt to collect the debt.
How Much Do You Get for Claiming a Spouse?
The taxpayer is married and will file a joint tax return. If you are filing jointly as a married couple, you are eligible for a greater standard deduction, which is equal to twice as much as the deduction for a single individual. The standard deduction for a married couple in the year 2023 is set at $25,900, which indicates that you and your spouse will each be able to deduct this amount from your income.
What is the Penalty for Illegally Claiming Someone as a Dependent?
If the IRS determines that you have falsely claimed a dependant on your tax return, you will be required to pay back the whole amount of money that you saved by doing so. In addition to the total amount, you will be forced to pay a late fee of 0.5% of the unpaid amount for each month that has elapsed after the tax was due. This cost will be assessed on the balance that has not been paid.
Do You Get More Money Claiming Single or Married?
Should I change my filing status on the W-4 to “single” rather than “married,” may I expect an increase or a loss in the amount of money I take home? Your amount of take-home pay will decrease if you change your withholding status from married to any of the other available options. When you file your taxes as a single person, more of your paycheck will be withheld than when you file as a married taxpayer.
FAQ
What happens when you file innocent spouse relief?
By requesting innocent spouse relief, you can be relieved of responsibility for paying tax, interest, and penalties if your spouse (or former spouse) improperly reported items or omitted items on your tax return.
Do I qualify for injured spouse?
You may be an injured spouse if you file a joint return and all or part of your portion of the overpayment was, or is expected to be, applied (offset) to your spouse’s legally enforceable past-due federal tax, state income tax, state unemployment compensation debts, child support, or a federal nontax debt, such as a …
What happens if you marry someone who owes back taxes?
If you marry someone with tax debt, you are not responsible legally to help repay those debts. That debt belongs solely to your spouse. Nearly every U.S. state recognizes that a spouse is not liable for premarital debt incurred by the other spouse. This not only goes for taxes but other debts as well.
Should I file separately if my husband owes taxes?
A: No. If your spouse incurred tax debt from a previous income tax filing before you were married, you are not liable. … Your spouse cannot receive money back from the IRS until they pay the agency what they owe. If your spouse owes back taxes when you tie the knot, file separately until they repay the debt.
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