Most married couples file a “joint” tax return to reduce the amount they pay. By filing “jointly” they each agree to pay all taxes, penalties, and interest due on the joint return. This is true even if their state divorce decree or other settlement agreement states that one spouse or former spouse will be responsible for the tax liabilities. Spouses who file joint tax returns or who simply sign a tax return that their partner has prepared have often found that they're being held responsible for back taxes caused by the ex-spouse.
There are provisions that may protect one spouse from the mistakes of another. If you find that the IRS is attempting to collect a tax that was incurred jointly with a spouse or former spouse, you may qualify for one or more of the following types of relief:
- Innocent Spouse Relief
- Separation of Liability
- Equitable Relief
- Basic Innocent Spouse Relief
- Separation of Liability Relief
- Equitable Relief
Each of these is better for different situations, and works better for different individuals. Figuring out which is the right one for your situation is the first step towards getting the innocent spouse relief you need.
Basic Innocent Spouse Relief
Basic Innocent Spouse Relief is designed to provide relief from taxes you have been found responsible for that are from your spouse or a former spouse failing to report their income, reporting income incorrectly, or claiming improper deductions or tax credits. In short, it's used to help alleviate the burden placed on you through the actions of your spouse. It can often alleviate all of the tax debt you're facing, as long as you can prove that you aren't responsible for the situation.
Separation of Liability Relief
Separation of Liability Relief is different in that it allocates taxes owed between you and your former spouse. This is done when items aren't reported properly on a joint return and you're found to owe more taxes as a result. In this case, taxes will be allocated between the two of you and you'll only be responsible for a portion of the tax debt.
Finally, Equitable Relief is kind of a 'last resort' that is used when a taxpayer doesn't qualify for either of the above options. It's a kind of relief that is applied to individual items on a joint tax return that can be attributed to your spouse or ex-spouse. It could also be used in cases where taxes haven't been repaid but the tax amount was reported correctly.
To request innocent spouse relief, you'll need to complete Form 8857 and submit it to the IRS. But before you do so, it's worth taking a look at whether or not you'll actually qualify for the relief at all. A few things can help you determine whether or not you're eligible to request this form of tax related relief from the IRS. The IRS' official website actually has a questionnaire that can help you determine your eligibility, but we can help break it down for you more clearly.
If you feel like you qualify for one of the types of innocent spouse relief, your next step will be to complete Form 8857 and submit it to the IRS. This form contains numerous bits of information regarding your past tax returns, your current situation, and more. It must be filled out completely and honestly, and is signed under penalty of perjury.
Once that Form 8857 has been filled out and submitted, the IRS will be required by law to notify the ex-spouse. This is to allow the other party the chance to provide information that could help in the determination of your innocent spouse relief claim.
It may take several weeks for the IRS to fully review your situation and to make a determination as to whether or not you qualify for and are approved for Innocent Spouse Relief. It's important that you take the time to know which of the different types of Innocent Spouse Relief you qualify for before you submit your information and that you take the time to get your current finances in order so you will be able to be fully prepared for the process and so you can easily answer any questions the IRS may have fully.
In order to ensure you get the best chances of receiving your innocent spouse relief, it's a good idea to get the help of a qualified, experienced tax attorney.
For more information on the innocent spouse provisions, call us or contact us by using our confidential contact form to schedule your FREE confidential initial consultation.