IRS innocent spouse relief could help avoid additional tax liability, interest, and penalties, but there are fundamental rules for you to follow.
Couples are usually seen as partners in crime, perfectly fit for one another.
Like two peas in a pod, they are meant to provide the best support to the other half, especially during those circumstances that sweep a lot of problems. One such trouble in paradise happens when a spouse is not directly liable for tax penalties or errors.
On joint tax returns, as the name suggests, both spouses are generally deemed responsible. But, if you are completely innocent and had no idea about errors in joint returns, you can back the support of IRS spouse relief to avoid the additional tax burden.
Can’t decide how to take off the joint tax return, for which you ain’t directly responsible? Fret Not! Check out how innocent spouse relief works and how you can get it.
What is innocent spouse relief?
IRS spouse relief provides you relief from paying additional tax, interest, and penalties during a circumstance when a spouse or ex-spouse didn’t reported income, reported income improperly, or claimed improper tax deductions or credits.
Who qualifies for innocent spouse relief?
Getting innocent spouse relief isn’t a walk in the park. The IRS can deny your request, delaying the process for as long as six months. IRS Publication 971 contains all the vital details, here are the five most important rules to remember about qualifying for IRS spouse relief.
- You must file taxes jointly.
- The error has to be comeuppance to the other person.
- You must not leave a single stone unturned to prove you are innocent.
- The circumstances must be riveting.
- Usually, you have to request innocent spouse relief/ IRS back tax relief in no less than two years after the IRS starts to collect the tax. (PS: There are some exceptions.)
Innocent spouse relief is for couples who filed a joint tax return (the married filing jointly tax status). If the income is missing from your tax return, it is usually because of your spouse’s income, not you. Make sure you can show that when you signed for the tax return, you didn’t know or had no reason to know that you were understating your tax liability.
The IRS pays attention to every detail. Right from the ilk of the error, your financial status, overall educational background, to how often you participated in the activity that surged the problem, whether the issue is part of a pattern, and other accompanying factors. The IRS also considers fairness when considering whether or not to grant innocent spouses relief. It takes an honest look at everything, from whether you benefited from the tax error to your marital status or your spouse has thrown it over.
How do I file for innocent spouse relief with the IRS?
To request IRS spouse relief, file IRS Form 8857. (You can forgo the seven-page form if you want to submit a signed written statement with similar detail.) The IRS will decide whether or not you’re responsible for paying the tax.
If you think you might qualify for innocent spouse relief, there are a few important things to keep in mind:
- The IRS plays a significant role in telling your spouse or ex-spouse that you requested innocent spouse relief. It will also permit your spouse to provide detailed information about your claim.
- The IRS will collect all the tax, interest, and penalties directly from your ex or spouse.
- If you have already paid some or all of the tax bill amount, the IRS will refund the tax payments you made with your money.
- If any part of the tax, interest, and penalties doesn’t qualify for IRS innocent spouse relief, then both of you will be deemed liable for that particular portion of the bill.
- Some taxes, like individual shared responsibility payments and other kinds of employment taxes, don’t qualify for IRS spouse relief.
Types of innocent spouse relief
If you don’t qualify for IRS spouse relief, you may still have two other viable options.
- Separation of liability relief. The IRS equally divides the tax bill between you and your spouse or ex, and each one of you is liable to pay your part of the share. You have to be legally divorced, separated, or widowed to qualify, and you can’t have lived with the person for at least 12 months prior to the relief request submission.
- Equitable relief. This may be an available option if you didn’t file for a joint return but are on the pin for your spouse’s error just because you live in a community property state, where income is considered a shared entity. Other than that, you might succeed at winning this relief if the tax return was correct but the tax wasn’t paid.
The difference you should know between innocent spouse relief and injured spouse relief
Scroll below to know the difference between innocent spouse relief and injured spouse relief: Innocent spouse relief is in general about allocating responsibility for a tax bill. Injured spouse relief permits an injured spouse to recover his or her portion of a tax refund from a joint tax return.
Additionally, the IRS may allow IRS spouse relief if all or part of the tax refund from a joint tax return was applied toward taxes your spouse owes concerning separate, child/spousal support, student loan debt, past-due federal or state taxes.
When you apply for injured spouse relief with IRS Form. Please note that it can take few months for IRS to process.
Final Thoughts
With the information mentioned above, I hope it will not be a problem to understand what IRS spouse relief stands for, how to apply, and lastly, seek out its benefits.
If you are planning to file IRS spouse relief, count on the expertise of Global Gate professionals. To qualify for relief, you will need to file a claim, and for this purpose, you can back the support of Tax resolution, who will help evaluate your qualification details as well as determine the type of relief you may qualify for.