In an ideal world, married people talk about their money. They discuss shared goals, income, expenses, and their spending habits. When disagreements arise, they can reach a compromise or find a solution.
But, that’s not always the case. People aren’t perfect and neither are their finances.
Experts may consider it financial infidelity when you fail to share financial information, including how much you earn and how much you spend, with a life partner. But if you withhold information about your earnings and expenses from not just your spouse but the Internal Revenue Service, you could be courting even bigger problems.
When you’re filing a joint tax return, both partners on the form are held responsible for paying any taxes owed. The IRS calls this “joint and several liability.”
However, in specific circumstances, a person can file for Innocent Spouse Relief, leaving the tax liability to their partner.
Should Married People File Taxes Jointly?
Tax professionals typically recommend that married couples file jointly. Filing a joint return comes with many tax benefits. Filing jointly:
- Doubles your standard deduction
- Doubles the thresholds that determine your tax bracket
- Doubles the thresholds for phase-outs of certain deductions and credits
- Qualifies your household for many tax credits under the Tax Cuts & Jobs Act
On the other hand, if a couple has disparate income and one has significant deductions such as medical expenses, which means they would benefit from itemizing deductions, filing separately could be the answer.
Also, if you have any doubts that your partner is telling the truth about their income or deductions, you might want to file separately. That way, you won’t be on the hook for errors on the return, an audit, or unpaid tax debt that belongs to your spouse.
Fortunately, if you decide to file jointly and then find out your spouse made an error, omitted income, or lied on your joint tax return, you may have some recourse through the IRS’ Innocent Spouse Relief program.
What Are the Four Types of Innocent Spouse Relief?
Based on current tax law, the IRS recognizes various types of tax relief for different situations. The IRS will explore the facts and circumstances of your claim and may grant relief for the requesting spouse.
You may qualify for one of several innocent spouse tax relief programs if you face tax debt that belongs to your spouse, even if you are still married.
Innocent Spouse Relief
You may qualify for standard Innocent Spouse Relief if your spouse made an understatement of tax, resulting from an error they made on the tax return.
You will qualify for relief if you can prove you didn’t know about the error and had no way to know about the error when you signed the return. The IRS may determine it would be unfair to hold you responsible for the debt.
Separation of Liability Relief
If you qualify for separation of liability relief, you might have to pay a portion of the tax debt, interest, and penalties accrued. Often, the IRS will grant this tax relief if the couple has divorced since filing.
Equitable Relief
The IRS may grant equitable relief if you don’t qualify for standard Innocent Spouse Relief but the evidence shows it isn’t fair to hold you liable for the tax debt. This can occur if:
- Your spouse spent money set aside for taxes without your knowledge
- You are a victim of domestic abuse
- You didn’t question the tax return for fear of retaliation
- Your spouse committed tax fraud without your knowledge
Injured Spouse Relief: Innocent Spouse Relief vs Injured Spouse
The IRS categorizes Injured Spouse relief separately, with a different Innocent Spouse form to file. However, if you meet the qualifications, this tax relief program can help you get back your share of a tax refund that may have been held to cover your spouse’s debts.
For instance, if your spouse owed past-due child support, state income taxes, or past-due Federal tax debt from prior years, and this year you qualify for a tax refund, you may still be able to claim that money.
You must file IRS Form 8379 within three years from the date the returned or two years from the date the tax was paid, whichever is later.
How to File Form 8857 Request for Innocent Spouse Relief
You can find IRS Form 8857 on the IRS website. Be sure to fill in all the relevant information so the IRS can make the best decision. The IRS will determine which form of Innocent Spouse Relief is relevant in your situation.
You should be aware that, once you file Form 8857, the IRS will contact your spouse or former spouse. The IRS won’t disclose your personal information, including your current name, address, place of business, or current financial status.
Do You Qualify for Innocent Spouse Relief?
Filing for Innocent Spouse Relief can be a sensitive, emotional experience, especially for victims of abuse. But it’s important to take action to safeguard your financial future and preserve your assets.
Alleviate Tax is here to help. We maintain strict confidentiality surrounding your case and treat every client with care and empathy. We’ve helped thousands of taxpayers just like yourself achieve a fresh start through Innocent Spouse Relief.
Reach out now or call 888-859-TAX1 today.
FAQs
Is there a time limit to file innocent spouse?
In general, the requesting spouse must file for Innocent Spouse Relief within two years from the date the IRS began collections action for the tax debt. Some exceptions exist if you apply for equitable relief.
Should I file innocent spouse vs injured spouse?
If you have had your tax refund garnished to pay past due debt belonging to your spouse, you should file for injured spouse relief. If you are facing tax debt due to your spouse’s error or tax fraud on a joint tax return, you should file for Innocent Spouse Relief.
How hard is it to get innocent spouse relief?
It can take up to six months for the IRS to review your situation and decide if you qualify for Innocent Spouse Relief. Enlisting the help of tax debt relief experts can improve your odds of a satisfactory outcome.
