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Innocent Spouse Tax Relief

Innocent
Spouse
Tax Relief

When a married couple files a joint tax return, both individuals are equally responsible for all taxes owed if there is a balance due. This is also called joint and several tax liability, as a married filing jointly couple is liable for taxes even if the additional taxes are the result of taxable income, tax deductions, or tax credits of a spouse or former spouse. If you believe that only your spouse or former spouse should be held responsible for part or all of the tax, you should request relief from the liability, including tax penalties and interest, by filing Form 8857 separately from your 2020 Tax Return. This might also be the case even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns.

How to Claim Innocent Spouse Relief

Form 8857 should be filed as soon as possible to eliminate any inaccurate dues in the form of tax liability that should belong to the other spouse. The IRS may send you a notice or propose an increase to your tax liability, to which you should file the form. The form must be mailed and cannot be e-filed - FileIT. When you prepare your taxes with eFile.com, the app will help you select and complete the form before you mail it in. See IRS Publication 971, Innocent Spouse Relief, to find which documents, if any, need to be submitted with the form. The IRS fax number and mailing addresses are listed below.

In comparison, the Injured Spouse claim is an application for the allocation of a tax refund. An injured spouse is defined as a taxpayer whose refund share is a part from a joint tax return that was or will be applied against past due federal and/or state taxes, spousal or child support, or student loans owed by your spouse. If you are approved as an injured spouse, you might recoup all or part of your share of the tax refund from the joint tax return.

The easiest way to file as Innocent or Injured Spouse is to start and e-file a tax return on eFile.com. The e-File app will prepare the forms you need to claim Innocent Spouse Relief. If you want to learn more about innocent spouse relief, read on.

Types of Tax Relief

Relief Types
Innocent Spouse Relief
What if your spouse or ex-spouse lied about their income or underpaid taxes without your knowledge on a past joint tax return and now you are being held responsible for someone else's tax debt? In that case, you can apply for Innocent Spouse Relief. If you qualify for Innocent Spouse Relief, you will not be responsible for your spouse or ex-spouse's unpaid taxes. When you signed the joint return, you did not know (and had no reason to know) that the return was incorrect.

All of the following conditions are required to qualify for innocent spouse relief:

  • A married filing joint tax return that has an incorrect tax amount which is solely attributable to your spouse's erroneous item, such as income received by your spouse but not reported on the joint tax return. Tax deductions, tax credits, and property basis are also erroneous items if they're incorrectly reported on the joint return. 
  • You must prove that, at the time when you signed the joint return, you didn't know, and had no reason to know, that incorrect statements were entered on the tax return.
  • You must show that, considering into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax liability.

The IRS will ask you to notify the spouse you filed the married filing joint return(s) with of your relief request and allow that spouse to provide information for consideration regarding your claim.

The application for innocent spouse relief must completed via Form 8857 no later than 2 years after the date the IRS first attempted to collect the taxes in question from you.

Separation of Liability Relief

Besides having filed a married filing joint tax return, one of the following requirements must be met in order to qualify for separation of liability relief:

  • You're legally separated or divorced from the spouse with whom you filed the married filing joint tax return.
  • You're filing as widowed.
  • You haven't been a member of the same household as the spouse with whom you filed the married filing joint tax return at any time during the 12-month period ending on the date you request relief.

Furthermore, you must show that you did not have actual knowledge of the item or issue that gave rise to the deficiency at the time you signed the joint return, unless you can prove you were asked to sign the joint tax return under duress.

In this case, the IRS will assign a certain amount of the tax liability to you and a certain amount to your ex-spouse. You will only be responsible for your portion of the tax debt along with a portion of the interest and tax penalties.

The IRS will ask you to notify the spouse you filed the married filing joint return(s) with of your relief request and allow that spouse to provide information for consideration regarding your claim.

The application for separation of liability relief must completed via Form 8857 no later than 2 years after the date the IRS first attempted to collect the taxes in question from you.

Equitable Relief
There are many circumstances which may disqualify you from classic Innocent Spouse Relief or the Separation of Liability Relief, but should not keep you from getting the tax relief you deserve.
  • Examples include having had to file separately due to state community property laws and having had knowledge of your spouse's tax fraud - even if you were afraid to question your spouse about it due to fear of physical abuse. The IRS may grant you Equitable Relief in some of these situations.
  • There is a long list of rules that guide the IRS on whether to grant Equitable Relief. Generally, you may qualify for it if you did not sign the fraudulent joint return with the intention of committing fraud, or if you signed it under duress (for example, if you were an abused spouse). If the IRS grants you Equitable Relief, you may not be held responsible for the unpaid taxes and you may even get a refund of some of what you have already paid. Under IRS guidelines, there is no time limit on claims of Innocent Spouse Equitable Relief. This means that if you did not request relief for an earlier year due to the old 2-year time limit on claims, you may now make a request. Also, if you did make a claim and it was rejected because of the time limit, you may now make a new request.
  • Read Publication 971 for more details on the innocent spouse tax relief.

The IRS will take into account abuse and financial control by the non-requesting spouse in determining whether equitable relief is warranted. You might also be asked to notify the spouse you filed the married filing joint return(s) with of your relief request and allow that spouse to provide information for consideration regarding your claim. 

If you lived in a community property state - Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin - and didn't file your tax return as married filing jointly, you might qualify for relief from the operation of state community property law. Read Publication 971, Innocent Spouse Relief, for more details on this. See also, this page on states and tax information.

Regardless, you must file Form 8857, Request for Innocent Spouse Relief, if you believe you qualify for the relief. Do not include Form 8857 with your 2020 Tax Return. Instead, mail it to one of the following addresses along with any additional documentation that may be requested.

Where to Mail Form 8857

Send your completed Form 8857, Request for Innocent Spouse Relief, to one of the following addresses. For 2020, the mailing addresses for Form 8857 have changed. If you are mailing with United States Postal Service or a private service, such as FEDEX or UPS, the address is now the same:

Internal Revenue Service Center
7940 Kentucky Drive, Stop 840F
Florence, KY 41042

If you are filing for a previous year, use the following addresses. If using the U.S. Postal Service:

Internal Revenue Service
P.O. Box 120053
Covington, KY 41012.

For FEDEX or UPS delivery service:

Internal Revenue Service
201 W. Rivercenter Blvd. Stop 840F
Covington, KY 41011.

Fax the form and attachments to the IRS at 855-233-8558. DO NOT mail your Form 8857 to any other IRS address. 

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