Posted by Income Taxes and Bookkeeping LLC

Essential Things to Know About Innocent Spouse Relief

Essential Things to Know About Innocent Spouse Relief

If you want to avoid extra taxes, penalties and interest due to the error or crime of your partner, an innocent spouse can help you. This article will explore essential things to follow. 

When you file a joint tax return, both parties are responsible for the tax bill. However, with an innocent spouse, you can avoid paying extra tax to Uncle Sam if your partner or ex-partner makes some grave error on the tax return. 


What is Innocent Spouse Relief?

This program is designed to protect taxpayers from being charged with liabilities caused by their partner or former partner. 

One of the cons of filing jointly is that it authorizes Uncle Sam to go after both parties for unpaid taxes alongside interest and penalties accrued. It doesn’t matter if the parties are separated and only one is responsible for some debts. However, the IRS innocent spouse relief is a program with which spouses can prove their innocence, which exempts them from liability for the other's debt.


You can get in touch with a tax pro to determine if you qualify for spouse relief or not. 

Exploring Your Qualification for Innocent Spouse Relief

Unfortunately, Uncle Sam does not grant all applications for the innocent spouse. An applicant needs to meet some criteria before their application for spousal relief can be given. 

  • The tax return that understated their tax liability was filed by the other spouse alone

  • They were not aware of such understatement and had no reason to be aware

  • All essential paperwork for the Innocent spouse relief was filed within two years after Uncle Sam’s initial attempt to go after them for the unpaid tax. 

Uncle Sam will review each document submitted to determine if they meet all criteria for an innocent spouse. 


Right Time to File for IRS Innocent Spouse Relief

Ideally, one should file for Innocent Spouse Relief on time. Once you are aware of the unpaid tax debt of your spouse or other spouses, it is better to file for an innocent spouse. Uncle Sam will let you know either via an IRS tax notice or a deliberate attempt to collect the debt.

However, it is essential to file immediately after Uncle Sam informs you of the existing tax debt within two years. Once two years elapse, you are automatically disqualified from spousal relief.

 

Forms to Submit to Request for IRS Innocent Spouse Relief

In requesting innocent spouse relief, it is essential to file IRS Form 8857. One can either request this form from Uncle Sam's office or print it from the website. Make sure, however, to work with a tax professional when filling the form, alongside getting all supporting documents.

 

Options if I am not qualified for Spousal Relief 

There are cases when people who filed a joint tax return might not qualify for Innocent Spouse Relief. In such a case, one might be eligible for Equitable Relief. The approval criterion for this is not as stringent as that of an innocent spouse, and it considers the entirety of your circumstance. 

Another option is the separation of Liability Relief. This process divides the entire extra tax owed between both parties – you and your spouse (current or past)


Comparing Innocent Spouse Relief and Injured Spouse Relief 

People with spouses who underpaid their taxes can enjoy innocent spouse relief protection, which racks up interest and penalties along the way. 

On the other hand, an injured spouse protects people who paid extra taxes from having any portion of their refund transferred or sued for the tax obligation of their partner. 


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