What Is Innocent Spouse Relief?

Tax return mistakes happen. They’re normally entirely innocent – tax returns and IRS forms can be complex to understand!

But what if it’s not you who makes the mistake, but your spouse? Should you be liable for their unreported income or understatement of tax? Below, we look at the “innocent spouse relief” rules and how you might qualify for relief.

What Is Innocent Spouse Relief?

Innocent spouse relief rules allow spouses to seek relief from a tax obligation if their spouse makes a tax return error. In other words, it means that you won’t pay additional tax just because your spouse did not complete their tax return correctly.

The idea behind the rules is that it is unfair to hold the “innocent” spouse responsible for the other spouse’s mistake. It is also helpful in situations where a spouse may not be entirely honest about their true financial circumstances.

How Does Innocent Spouse Relief Work?

Innocent spouse relief may apply if you are filing a joint tax return.

First, you complete certain IRS forms to declare that you had no knowledge of your spouse’s mistake. The IRS will notify your spouse because they have a right to provide their own explanations.

• If your claim is successful, you’ll get back what you paid with your own money.
• You won’t get back any money for tax you owed. The provision only covers tax, interest, and penalties eligible for spousal relief.
• If you can’t claim innocent spouse relief, you may have other options. Our team can explain the procedures involved.

You can seek a type of innocent spouse relief if you are divorced. You must have a divorce decree, though, to qualify.

Innocent Spouse Relief vs. Injured Spouse Relief

It’s crucial not to confuse “innocent” spouse and “injured” spouse relief. Although they sound similar, they are different procedures.

• Innocent spouse relief: Stops the blameless spouse from being held liable for the at-fault spouse’s tax return errors.
• Injured spouse relief: Allows the blameless spouse to seek relief if their tax refund is used to cover their spouse’s tax debt.

In other words, innocent spouse relief is about deciding who is liable for tax due. Injured spouse relief is about “refunding” a portion of tax paid when it was unfair to hold that spouse responsible.

Confused about the difference? Our tax specialists can explain what relief you might qualify for if you schedule a free consultation.

Who Qualifies as an Innocent Spouse for the IRS?

You must meet very specific criteria to qualify for innocent spouse relief. To seek relief, you must show that:

• You completed a joint tax return
• There are tax errors on the return wholly attributable to your spouse
• You did not know, and had no reason to know about, the errors prior to signing
• It is unfair to hold you responsible for your spouse’s errors

What is “knowledge” for IRS purposes? It’s a vague concept. In simple terms, you can’t claim spouse relief if:

• You knew about, or suspected, errors on the tax return
• A reasonable person in your situation would have known about the errors

So, for example, if you had reason to suspect that your spouse underreported their income, you can’t claim.

Domestic Violence Victims

Domestic violence victims may not be required to show that they didn’t know about the errors. This is because they may have felt threatened or coerced into signing.

The criteria for domestic violence victims are more complex than for typical partners. Legal advice may be helpful in such scenarios.

Filing for Innocent Spouse Relief

There is a simple process to follow when filing for innocent spouse relief. All you must do is complete Form 8857 to request relief.

The IRS will review the information and they may ask your spouse for further information. It could take up to six months for the IRS to decide whether to grant relief.

In the meantime, continue to pay your taxes! Otherwise, you risk incurring further penalties, including fines or interest.

Innocent Spouse Relief: IRS Filing Deadlines

As with any tax matter, you only have so long to request innocent spouse relief from the IRS. Typically, you must request relief within two years of when the IRS first tried to collect the tax bill. Otherwise, your claim could be rejected for being time barred.

You may qualify for a time extension. Our team can advise if an extension applies in your situation.

Burden of Proof in IRS Innocent Spouse Claims

In innocent spouse relief claims, it’s the claimant’s responsibility to prove they didn’t know about the tax error. This is challenging – you may require evidence to support your claim.

Before deciding, the IRS will consider various factors such as:

• Your level of education (how reasonable it is to expect you to thoroughly investigate your spouse’s tax returns)
• If you benefited from the tax mistake
• The nature of the error
• Whether you have attempted to claim innocent spouse relief before

The IRS will also consider, more generally, whether it is “fair” to grant relief in the circumstances.

It is hard to predict whether the IRS will accept or reject a claim. However, our experienced tax specialists can walk you through the process.

We can advise on the strengths and weaknesses of your claim, and help you understand what to expect. We can also represent you and handle negotiations on your behalf, should you need our help.

What if My Claim Is Rejected?

You can appeal an innocent spouse relief decision within 30 days. You will need to complete certain paperwork and provide supporting documentation.

IRS innocent spouse relief appeals are complex. To give your appeal the best chance of success, call Innovative Tax Relief for IRS representation. We can help you complete the relevant paperwork and build the strongest case in your favor.

Get Help with Your Tax Return or Tax Debt Today

Tax errors are especially stressful when they involve spouses. If you’re applying for innocent spouse relief, our team is here to help. We understand the challenges you face and how difficult this time is, but we’re standing by, ready to assist.

Whether you need advice on your financial situation, or more formal representation, contact our team. We offer free consultations to discuss your concerns and how you might move forward. Take control of your financial situation – call now or reach us online.