IRS Form 8857 Where to Mail

Filing jointly as a married couple can simplify income tax filing. However, it also creates shared responsibility for the tax return’s accuracy. This can create issues if one spouse’s errors lead to unexpected tax debt. This is where innocent spouse relief can help. Understanding this provision can prevent significant financial hardship.

Table of Contents:

• Understanding Relief as an Innocent Spouse
• Who Qualifies for Relief as an Innocent Spouse?
• Situations Where You May Not Qualify
• How to Apply for Relief as an Innocent Spouse
• What Happens After You Apply?
• Other Types of Relief
• Innocent Spouse Relief vs. Injured Spouse Relief

Understanding Relief as an Innocent Spouse

Innocent spouse relief protects taxpayers from additional taxes, interest, and penalties due to their spouse’s errors on a joint return. This covers various mistakes, from unreported income and false deductions to wrongly claimed credits. Both spouses remain responsible for the tax debt, even after a divorce, unless the IRS grants innocent spouse relief. Assigning the debt in a divorce decree or having only one spouse earn income does not release the other spouse from responsibility without IRS approval, which is further clarified on the IRS website.

Who Qualifies for Relief as an Innocent Spouse?

The IRS has specific qualifications for innocent spouse relief. You might qualify if you filed a joint tax return with an understatement of tax due to your spouse’s errors. Additionally, you must have been unaware of the errors or reside in a community property state, according to the IRS. The requesting spouse should complete and file IRS Form 8857.

Form 8857 requests details about your financial and tax filing history. It also includes questions about domestic violence or abuse. If fear or coercion led you to sign the return despite knowing about the errors, you might be eligible for relief.

While the IRS considers all facts and circumstances, demonstrating eligibility is crucial. Carefully review the innocent spouse rules to make an informed decision. Consult a qualified tax professional for personalized advice based on your specific situation. Below are some examples of situations that might make you ineligible.

Situations Where You May Not Qualify

You won’t qualify for relief if you knew or should have known about the errors on the joint tax return. The IRS considers your financial situation and lifestyle. A lavish lifestyle inconsistent with your reported income and assets may raise red flags. Direct deposit may make lavish spending harder to track, however the IRS may investigate the electronic federal tax payment made compared to the joint income.

Missing deadlines also disqualifies you from relief. There’s a two-year limit to apply, starting from the date the IRS first notified you of the understated tax. Signing an Offer in Compromise (OIC) or a Closing Agreement with the IRS also disqualifies you.

Prior court decisions regarding innocent spouse relief or related proceedings also bar future claims. This information is outlined in Form 8857. Provide your tax professional with the exact dates of any court orders (filed, signed, and executed) as they can vary. This information is crucial for your tax pro to review before filing your claim. You will also want to gather and organize any information about an installment agreement or any amended returns and reduced refunds.

How to Apply for Relief as an Innocent Spouse

Gather supporting documents like proof of separation, divorce, abuse, coercion, tax payments towards the tax debt, and records regarding your current finances. These documents can bolster your claim of innocence and demonstrate your eligibility. Providing additional support through documentation, especially regarding financial hardship, strengthens your case.

Complete Form 8857 with accurate details about yourself, your spouse, and the tax situation. The IRS accepts the form by mail or fax. Once submitted, be prepared for a waiting period, which can take several months.

Respond promptly to any IRS requests for additional information. The IRS is required to notify your spouse about the relief request, allowing them to participate in the process.

Remember that innocent spouse relief doesn’t prevent offsets of refunds or credits for jointly filed return debts. This relief addresses specific inaccuracies, falling under the innocent spouse clause.

What Happens After You Apply?

If the IRS approves your request for innocent spouse relief, the additional taxes and penalties are removed. The IRS generally follows established precedents in granting relief. However, each case requires completion and submission of Form 8857. This process can be complex, but worth pursuing.

If the IRS denies your request, you’ll receive a letter explaining the reasons. The letter also outlines appeal options. You have 30 days from the denial date to file Form 12509, including supporting documentation, and address it as instructed in the determination letter. Make sure to include all relevant information in your initial application, and consider the appeals process from the start. You might even find yourself considering the difference between injured spouse versus innocent spouse options if your refund has been reduced.

Submit all evidence of your situation to the IRS, not to the appeals office, as new evidence needs to go directly to the IRS. Ensure proper organization and completeness of documentation to increase your chances of success. There are specific requirements for your appeal documents.

Other Types of Relief

Even if you don’t qualify for innocent spouse relief, alternative options exist: equitable relief and separation of liability.

Equitable relief applies if holding you responsible for the tax debt seems patently unfair. While the differences between innocent spouse and equitable relief can appear complex, there are distinctions in how each form of relief can benefit you. This would apply whether the form W- was accurately reporting income tax and withholdings, whether or not the correct amount of estimated taxes was paid throughout the year, and how much child tax was claimed on the return.

Consider whether you benefited significantly from the error on the tax return. Your filing status (married or separated) matters in determining relief under Section 6015(f). If you’re in a complicated tax situation, remember that the IRS offers help with resources such as tax withholding estimators, federal tax payment methods via direct pay and bank account access, and managing your online account. Whether it’s making payments on your child tax credit debt or figuring out your payment plan for additional tax, you can access payment methods like Electronic Federal Tax Payment System.

The additional tax, penalties, or interest must cause substantial financial hardship. Financial allowances determine eligibility for this type of relief.

Separation of liability applies if you’re no longer living with the spouse named on the joint return. The IRS divides the tax debt based on each spouse’s income as detailed in IRS guidelines. Relief requests cover taxes from employment, joint tax debts, self-employment taxes, and sometimes household employment taxes, despite typically being excluded from other relief programs. Such requests are quite frequent. IRS Publication 971 offers more information about spousal relief, including options under section 6015(b). Keeping your tax paperwork up-to-date is key. Remember that innocent spouse relief won’t address issues stemming from erroneous items on a prior year’s tax return.

Innocent Spouse Relief vs. Injured Spouse Relief

Innocent and injured spouse relief are often confused, but they differ significantly. Innocent spouse relief removes a spouse’s liability for penalties due to the other spouse’s error. Injured spouse relief protects a spouse’s share of a tax refund withheld due to debts like student loans, state taxes, or child support. Injured spouse relief has no effect on any joint tax debt or if the requesting spouse had a substantial benefit as detailed by IRS guidance.

Facing a large tax bill due to joint return errors is a situation many taxpayers experience. Thankfully, the IRS offers relief options, including relief when spouses work together.

If you believe you meet the requirements for innocent spouse relief, consider contacting a professional. Navigating the application process can be tedious, but prompt action eases the process.