What is Innocent Spouse Relief?
Innocent Spouse Relief is a provision offered by the IRS to provide relief to taxpayers who have filed a joint tax return with their spouse or former spouse and later discover that there are errors, omissions, or fraudulent activities. The innocent spouse may be relieved of the tax liability of those errors or fraudulent activities created. Spouses are equally responsible for the taxes owed, and the IRS can pursue collection actions against both taxpayers.
Innocent Spouse Relief protects a spouse from the liability of others if unaware of the errors or fraudulent actions committed by the other spouse. To qualify for Innocent Spouse Relief, you must meet specific criteria:
When Can We File Married Filing Joint Returns:
When spouses file a tax return together, the filing status is called Married Filing Jointly. You can file separately, but there are usually more benefits to filing Married Filing Jointly. To qualify, you must have been married before January 1st of that calendar year. If you married on or after January 1st, you can file Married Filing Jointly the following year.
Understated Tax:
There must be an understated tax on the joint return, meaning that the IRS determines that the total tax owed should be more than the amount reported on the return.
Erroneous Items by the Spouse:
Erroneous items claimed by the spouse are any unreported gross income received by the spouse or any incorrect deductions, credits, or property basis claimed by that spouse. This is grounds to file an Innocent Spouse Relief claim.
Lack of Knowledge or Reason to Know:
The innocent spouse must demonstrate that when they signed the joint tax return, they had no knowledge of the errors or fraudulent activities and had no reason to know about them.
Unfair to Hold Liable:
The facts and circumstances will prove it unfair to hold the innocent spouse liable for the understated tax amount.
Innocent spouse relief claims do not provide relief for all the taxes owed. The innocent spouse is still jointly liable for any amount not included in the innocent spouse’s claim.
Individuals seeking Innocent spouse relief must provide clear, convincing evidence to support their claim. This provision alleviates an individual’s tax liability when their joint tax return contains errors and demonstrates that they were unaware of the issues or had no reason to know about them.
