When married people file a joint income tax return that bears the signature of both parties, then both spouses are 100 percent liable for any tax debt. Most of the time, this does not cause any problems beyond finding the funds to pay the family’s tax liability. However, in some cases, one spouse may file a tax return with errors that causes undue hardship on the other spouse. In these cases, the wronged spouse may qualify for Innocent Spouse Relief.
What Does the IRS Look At?
When determining your eligibility for Innocent Spouse Relief, the IRS conducts a thorough review of you and your current or former spouse, including your work experience, any physical or mental disabilities you may have, the relationship status (such as divorced, separated, or still married), as well as how involved you are in the household finances. There is no one factor that bears more weight than another, although being separated or divorced provides some benefit to claiming that you are a wronged spouse. A battered spouse may also be able to claim that he or she signed due to forceful coercion and fearing his or her safety. You need more than just stating that your spouse lied or that you were unsure about the details regarding what you signed. Furthermore, you have to prove you did not gain any benefits from signing the inaccurate return.
The Three Conditions
The IRS has three conditions for qualifying for Innocent Spouse Relief, and you must meet all three in order to be rewarded the status. You must be able to prove that:
Any inaccuracies in the tax return was completely the fault of your spouse
You had no reason to know and were completely unaware about any errors or understatements
Holding you responsible for any understated taxes would be unfair
How to Apply for Innocent Spouse Relief
To apply for Innocent Spouse Relief, you should file Form 8857 as soon as you become aware of the problem. You can include a letter with additional information if you believe it could help your case. In most cases, this should be filed within 2 years after the IRS’s initial attempt to collect the tax.
It is to your benefit to demonstrate that you took time to ensure that the joint income tax return was correct as far as you knew before you signed it or that you were somehow tricked into signing an erroneous return. The erroneous items affecting the tax return typically include unreported income or an incorrect deduction, credit, or basis. If you had actual knowledge or reason to know, then you will not qualify for Innocent Spouse Relief. Reason to know means that a reasonable person in a similar situation would have been aware of the errors or understatement.
If you feel that you should not be liable for a problem your spouse did on your income taxes, then you should talk with tax professionals about your eligibility for Innocent Spouse Relief. In some cases, you may not qualify to be completely relieved of any tax liability, but you may be given partial relief.
Call Fidelity Tax Relief today at 877-372-2520 to discuss your situation and find the right solutions to your tax problem or speak with John Bright, our Innocent Spouse Relief specialist by calling 714-500-7369
