On joint tax returns, both filers are generally responsible for the tax bill. But innocent spouse relief is a way to avoid paying additional tax you might owe the IRS if your spouse or ex-spouse made significant errors on your joint tax return.
Here’s how innocent spouse relief works, and how you can get it.
What is innocent spouse relief?
Innocent spouse relief is an IRS procedure that allows people to avoid paying additional tax, interest and penalties if a spouse or ex-spouse didn’t report income, incorrectly reported income or improperly claimed tax deductions or credits. Innocent spouse relief is not the same as injured spouse relief.
What qualifies for innocent spouse relief?
Getting innocent spouse relief isn’t automatic. The IRS can deny your request, and the process can take as long as six months. IRS Publication 971 has all the details, but here are five important rules to remember about qualifying for innocent spouse relief.
You must file taxes jointly.
The error has to be attributable to the other person.
You must prove your innocence.
The circumstances must be compelling.
Generally, you have to request innocent spouse relief no later than two years after the IRS started trying to collect the tax from you. (There are some exceptions.)
Innocent spouse relief is for people who filed a joint tax return (the married filing jointly tax status). If income is missing from your tax return, it should be income your spouse received, not you. Be able to show that when you signed the tax return, you didn’t know and had no reason to know that you were understating your tax liability.
The IRS looks at everything from the nature of the error to your financial situation, your educational background, how much you participated in the activity that created the problem, whether the issue is part of a pattern and other factors. The IRS also considers fairness when determining whether to grant innocent spouse relief. It looks at everything from whether you benefited from the tax error to your marital status and even whether your spouse has deserted you.
How do I file for innocent spouse relief with the IRS?
To request innocent spouse relief, file IRS Form 8857. (You can forgo the seven-page form if you want and submit a signed written statement with the same information.) The IRS will determine the tax you’re responsible for paying.
If you think you might qualify for innocent spouse relief, there are a few things to keep in mind:
The IRS is required to tell your spouse or ex-spouse that you requested innocent spouse relief. It will also allow your spouse to provide information regarding your claim. If you feel unsafe, you can call the National Domestic Violence Hotline at 800-799-7233 or live chat at www.thehotline.org.
The IRS will collect the tax, interest and penalties from your spouse or ex.
If you already paid some or all of the tax bill, the IRS will refund only the tax payments you made with your own money.
If any part of the tax, interest and penalties doesn't qualify for innocent spouse relief, both of you are liable for that portion of the bill.
Some taxes, such as individual shared responsibility payments and certain kinds of employment taxes, don't qualify for innocent spouse relief.
Types of innocent spouse relief
If you don’t qualify for innocent spouse relief, you may have two other options.
Separation of liability relief. The IRS divides the tax bill between you and your ex, and you each pay your own share. You have to be divorced, legally separated or widowed to qualify, and you can’t have lived with the person for the 12 months prior to your request for relief.
Equitable relief. This may be an option if you didn’t file a joint return but are on the hook for your spouse’s error because you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin), where income is considered shared. Alternatively, you might get this relief if the tax return was correct but the tax wasn’t paid.
The difference between innocent spouse relief and injured spouse relief
Here's the difference between innocent spouse relief and injured spouse relief: Innocent spouse relief is largely about assigning responsibility for a tax bill. Injured spouse relief allows an injured spouse to recoup his or her portion of a tax refund from a joint tax return.
The IRS may grant injured spouse relief if all or part of your share of a tax refund from a joint tax return was (or will be) applied toward taxes your spouse owes for separate, past-due federal or state taxes, child or spousal support or student loan debt.
You apply for injured spouse relief with IRS Form 8379. Note that it can take the IRS a few months to process.
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