Married taxpayers enjoy benefits by filing jointly, but the situation can get messy if one spouse accrues unpaid taxes, interest, or penalties, particularly in the event of a divorce. IRS Innocent Spouse Relief is a program by which a taxpayer can petition not to be held responsible for the tax liability of a current or former spouse.
What Is IRS Innocent Spouse Relief?
IRS Innocent Spouse Relief is a special program designed to protect taxpayers from incurring tax liabilities racked up by their current or former spouse.
When a couple files jointly, they implicitly give the IRS authority to pursue both spouses for unpaid taxes as well as for any interest or penalties that get tacked on. The IRS retains this authority even if a divorce decree expressly stipulates that one party is liable for certain debts and tax obligations. Fortunately, the IRS offers relief for spouses who can prove they should not be liable for the other spouse’s tax debt. A qualified tax professional can determine if you qualify for spousal relief and can help you submit the proper paperwork. (Schedule a call if you need help).
Do I Qualify for Innocent Spouse Relief?
Applying for Innocent Spouse Relief from the IRS does not guarantee approval. A taxpayer generally qualifies for relief from their spouse or ex-spouse’s tax obligation if they meet the following innocent spouse criteria:
- They filed a joint return that understated a tax obligation or liability incurred directly by their spouse and only their spouse.
- There is no reason to believe they knew about the understatement at the time of the filing.
- They file the proper paperwork and apply for Innocent Spouse Relief within two years after the IRS’s initial attempt to collect the unpaid tax.
The IRS will review the documents submitted by the applicant to determine whether they meet all required innocent spouse criteria.
When Should I File for IRS Innocent Spouse Relief?
The sooner you file for IRS Innocent Spouse Relief, the sooner you set the process in motion to be absolved of your spouse or ex-spouse’s tax bill. Ideally, you should request relief as soon as you become aware that your spouse or former spouse has incurred unpaid taxes for which the IRS is claiming you are liable. The IRS will let you know either by sending you a notice or making an outright attempt to collect.
At the absolute latest, you must file within two years of being made aware by the IRS that the tax debt exists. After two years have passed, you are no longer eligible for spousal relief.
What Form Do I Submit to Request IRS Innocent Spouse Relief?
To request Innocent Spouse Relief, you must file IRS Form 8857. You can get this innocent spouse form directly from the IRS or print it from their website. A tax professional can also supply you with it and can help you complete it and attach supporting documentation.
Do I Have Other Spousal Relief Options if I Don’t Qualify for Innocent Spouse Relief?
If you have a joint tax return and do not qualify for Innocent Spouse Relief, you might qualify for another program called Equitable Relief. Its approval criteria are much less specific, and the IRS considers the totality of your circumstances. A third spousal relief option is Separation of Liability Relief. With Separation of Liability, the additional taxes owed are split between you and your current or former spouse.
Innocent Spouse Relief vs. Injured Spouse Relief
Innocent Spouse Relief protects individuals whose spouses underpaid their taxes, potentially racking up interest and penalties in the process. Injured Spouse Relief protects individuals who overpaid their taxes from having part of their refund applied against their spouse’s tax obligation.