Innocent Spouse Relief is a provision by the IRS that protects individuals from being held liable for tax understatements made by their spouse. Or ex-spouse on a joint return. When couples file jointly, both parties are equally responsible for the entire tax liability. However, there are circumstances where one spouse may be unaware of errors, omissions, or fraudulent actions by the other. In such cases, Innocent Spouse Relief provides a way to avoid being penalized for the other spouse’s mistakes. Here’s what you need to know about qualifying for Innocent Spouse Relief.
How to Qualify for Innocent Spouse Relief
- To qualify for Innocent Spouse Relief, certain conditions must be met. First, you must have filed a joint tax return, which includes the understated or incorrect tax liability. The error could be due to unreported income, improper deductions, or tax credits claimed solely by your spouse. If you had no knowledge of the error when signing the return, you might be eligible for relief. It’s important that you prove you had no reason to know of the tax discrepancy when you signed the joint return.
- Another key factor in qualifying for Innocent Spouse Relief is that it would be unfair to hold you accountable for the understatement of tax. The IRS will consider several factors to determine fairness. For example, whether you benefited from the error or if there was evidence of your spouse being deceitful about the financial situation. Your case will also be evaluated based on whether you took reasonable steps to investigate the information on the tax return.
- You must apply for Innocent Spouse Relief within two years after the IRS first attempted to collect the tax. This deadline is crucial, as missing it could disqualify your request for relief. Additionally, Innocent Spouse Relief only applies to liabilities associated with understated taxes, not underpaid taxes.
- To apply, submit Form 8857 (Request for Innocent Spouse Relief). Also provide any supporting documentation that can help prove your case. The IRS will review your application and may ask for additional information. If successful, you will be relieved of responsibility for paying the additional tax, interest, and penalties related to your spouse’s actions.
Conclusion
Qualifying for Innocent Spouse Relief can help protect individuals from unfair tax burdens. Particularly, when they were genuinely unaware of their spouse’s misconduct. Understanding the eligibility requirements and filing within the correct timeframe are key to securing this form of tax relief.
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