Innocent Spouse Relief
Many married taxpayers choose to file a joint tax return. When filing jointly, both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise from the joint return even if they later divorce. Additionally, joint and several liability means that each taxpayer is legally responsible for the entire liability. Thus, both spouses on a married filing jointly return are generally held responsible for all the tax due even if one spouse earned all the income or claimed improper deductions or credits. The IRS considers spouses on a joint return to be joint and severally liable even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. In some cases, however, a spouse can get relief from joint and several liability.
Three types of Innocent Spouse Relief
For spouses who filed joint returns, there are three types of relief from joint and several liability:
- Innocent Spouse Relief: this relief provides you relief from additional tax you owe if your spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits.
- Separation of Liability Relief: this relief provides for the allocation of additional tax owed between you and your former spouse or your current spouse from whom you are separated when an item was not reported properly on a joint return. The tax allocated to you is only the amount for which you are responsible.
- Equitable Relief: you may qualify for this relief when you do not qualify for innocent spouse relief or separation of liability relief for something not reported properly on a joint return and generally attributable to your spouse. You may also qualify for equitable relief if the amount of tax reported is correct on your joint return but the tax was not paid with the return.
Will I Qualify for Innocent Spouse Relief?
To qualify for innocent spouse, you must meet all of the following conditions:
- You filed a joint return that has an understatement of tax that is solely attributable to your spouse’s erroneous item. An erroneous item includes income received by your spouse but omitted from the joint return. Deductions, credits, and property basis are also erroneous items if they are incorrectly reported on the joint return;
- You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax; and
- It would be unfair to hold you liable for the understatement of tax accounting for all the facts and circumstances.
You must request innocent spouse relief or separation of liability relief no later than 2 years after the date the IRS first attempted to collect the tax from you. If the IRS rejects your innocent spouse relief request, you may file an appeal with the U.S. Tax Court.
Can I appeal an Innocent Spouse Relief Determination?
After you file Form 8857, you may be able to petition the United States Tax Court to review your request for relief if: 1. The IRS sends you a final determination letter regarding your request for relief, or 2. You do not receive a final determination letter from the IRS within six months from the date you filed Form 8857.
The United States Tax Court is an independent judicial body and is not part of the IRS. You must file the petition no later than the 90th day after the date the IRS mails its final determination letter to you. If you do not file a petition, or you file it
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