Innocent Spouse Relief
Even though the tax benefits from filing jointly can be great sometimes the consequences of a dishonest spouse are costly. If one spouse makes an understatement of tax or an incorrect deduction, credit, or basis, both spouses are equally guilty.
To protect a spouse from their spouse or former spouse’s intentionally dishonest actions, the IRS has implemented the “Innocent Spouse Relief” program. If the requesting spouse qualifies for this program, the IRS will relieve the innocent spouse of any tax debt, interest and penalties, a misdemeanor due to tax evasion, or even a felony due to tax fraud.
Qualifying for Innocent Spouse Relief
To qualify for innocent spouse relief, the requesting spouse must prove that they did not know or did not have reason to know of their spouse’s error at the time of filing. The IRS examiner assigned to the case will investigate not only the nature of the erroneous item, but also the financial situation of both spouses (or former spouse), educational background, business experience, extent of both spouses’ involvement with filing the return, and among other items, the history of past returns from both taxpayers.
Similar Innocent Spouse Relief Programs
There are three types of IRS innocent spouse relief: Innocent Spouse Relief, Separation of Liability Relief, and Equitable Relief.
Separation of Liability Relief
If the taxpayer is divorced, legally separated, widowed, or was not a member in their spouse’s household at the time of the filing, they can receive relief from this program. When you file for separation of liability relief, you cannot have lived your spouse or ex-spouse for 12 months starting the day you file for relief. Temporary absences like military service, prison time, or time spent int he hospital, do not count towards these 12 months of separation. There are several situations where you may not qualify for separation of liability relief. A tax professional will know if you could qualify or not and will give you guidance on how to handle your specific situation.
After not qualifying for either innocent spouse relief or separation of liability relief, it’s still possible to qualify for equitable relief. If a spouse signed the tax return under duress or can prove in other ways that they are not liable for tax deficiency on the return, they may qualify for this type of relief. This type of relief will then help the innocent spouse with the payment of the understatement of tax. A tax professional can evaluate your situation and know whether or not this type of relief will be the best solution for you.
Seek a Tax Professional for Help
If you are unsure of what program to apply for or need more support to fight for innocent spouse relief, call us today. We have handled many cases where individuals are innocent of their spouse’s actions. We can help you find the relief you deserve.