What is Innocent Spouse Relief?
When you file for innocent spouse relief, you can be relieved of the financial responsibilities tagged on to you from your spouse. These responsibilities would include any taxes, interest, or penalties that resulted from your spouse improperly inputting on their tax return.
Form 8857 is the official document that determines what taxes are forgivable on your behalf. Figuring out the amount is not your responsibility, but the How To Allocate the Understatement of Tax section of Publication 971 allows you to do so.
Please note: this form is not simply a “get out of jail free card”; you still may be responsible for any interest, tax, and penalties that do not qualify.
Who Qualifies for Innocent Spouse Relief?
To be considered for Innocent Spouse Relief, you must meet all of the following requirements:
- You filed your tax return jointly.
- Proven evidence that your spouse filed the joint return improperly/displays an understatement of tax due to “Erroneous Items.”
- Upon your signing of the return, you had no recollection (or any intent of knowing) that your spouse filed the return incorrectly.
- Given specific conditions, it would be unfair to be held responsible for said unpaid taxes.
- Erroneous Items are essentially items that were either incorrect or left out of a return. Some of the most common erroneous items include items that went unreported or incorrect deductions, credit, or basis claimed by the spouse. (Ex. claiming a deductible on a state fine for your business as fines that are not deductible
Filing Jointly vs. Separately
Filing jointly vs. separately can be a pivotal factor in whether you can or cannot file for innocent spouse relief.
Although filing jointly has many benefits for married couples, it doesn’t mean that one spouse should handle all of the filings. We have found a majority of our clients to be widowed or divorced spouses who had no idea what was happening with their taxes because their other half handled everything for them—so they thought.
Why should both spouses be involved with the taxes?
It’s certainly more convenient when you’re filing jointly to allow one spouse to handle everything related to the taxes. Especially when one spouse is a stay-at-home parent or is unable to work. Filing for two can be a lot of work without the help of a tax professional.
Remembering to file can be difficult, though we do our best to set reminders and mark calendars. We’re human, and spouses often forget to file taxes or fear telling their significant other about mistakes they made.
Years later, clients will tell us that they had no idea that their spouse skipped years or filed incorrectly. Taking on taxes for the first time in several years or more, without much context to what your spouse was doing, can be overwhelming and discourage you from filing on your own.
A final issue to consider when only one spouse handles filing: How will you know how to file? Filing is more than simply documenting your income. There are various types of deductions available to ensure you don’t end up owing more than you should.
The best thing you can do to protect yourself from being audited is to get professional help with filing. Tax professionals can evaluate your income and expenses to determine if you qualify for deductions.
When To Seek Professional Help
In general, we always recommend seeking professional help to qualify for Innocent Spouse Relief because it can be so complicated.
Unlike other tax relief programs, Innocent Spouse Relief requires proof that you had no recollection of the unpaid tax balance or incorrect filing. It is best to seek a tax attorney to help strategize and present your case to the IRS, as the IRS will actively work against a taxpayer claiming innocence.
If you need assistance or more information about Innocent Spouse Relief, feel free to call one of our certified tax experts at 833-419-RISE(7473).
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