What is Innocent Spouse Relief with the IRS?
Innocent Spouse Relief states that if you previously filed a joint return with your spouse, and you believe that you should not be held accountable for mistakes made (or fraud committed) by your spouse, then you could be a candidate for Innocent Spouse Relief for your tax debt.
According to the IRS, There are Three Types of Innocent Spouse Relief:
- Traditional Innocent Spouse Relief - Your spouse filed something wrong on your joint return and you are potentially not liable for the tax debt that occurs after the error is corrected.
- Separation of Liability - If there is a balance due on your joint return, you could be responsible for only your portion of the amount due. This is based directly on your income and withholdings and/or payments you made.
- Equitable Relief - If you do not qualify for the first two types of Innocent Spouse Relief, the IRS may grant you Equitable Relief because it would be unfair to hold you responsible.
However, the following conditions must generally be met in order to apply for Innocent Spouse Relief:
- You must file Form 8857 no later than two years after collection on the liability starts
- You must file a joint return
- You must have an understatement of tax (you owe the IRS money) due to error(s) by the other, non-requesting spouse
- At the time of the signing of the return, the requesting spouse did not know of understatement of tax (and can prove this)
- It is inequitable to hold the requesting person who did not know of the error liable for the additional tax
Assuming that you meet the conditions, what are your chances for obtaining relief?
Assuming that you meet the above requirements, the following eight factors show what would improve your chances of having an Innocent Spouse Relief claim approved and those that would decrease your chances for approval:
Factors for Relief
- Your marital status is divorced or separated (for Separation of Liability, it is required for at least the past 12 months)
- Requesting spouse will suffer a hardship due to the error
- The requesting spouse has suffered abuse
- In a divorce decree or separate legal arrangement, the non-requesting spouse is obligated to pay the liability (it is helpful if the decree states why the non-requesting spouse is liable - i.e. it was their error that was not known to the requesting spouse)
Factors Against Relief
- The understatement is attributable to an error made by the requesting spouse
- The requesting spouse had knowledge, or a reason to know, of the omission or error
- The requesting spouse received significant benefit from the income that was understated
- In a divorce decree or separate legal arrangement, the requesting spouse is obligated to pay the liability
Reed Humphrey is VP of Marketing and Business Development at easyIRS.com - the easy alternative to irs.gov
Reed has an impressive history of sales and marketing leadership in companies such as BCE Emergis and ADP. He has co-founded or led marketing at four different start-ups, including a tax services firm that grew revenues by 100-fold under his direction.