Many married taxpayers file a joint tax return to qualify for the tax benefits it entails. In cases, wherein one of the spouses improperly reports or omits an item, the other spouse doesn’t have to suffer the consequences. In such cases, the innocent spouse can seek IRS innocent spouse relief. Although innocent spouse tax relief has many benefits, there are many misconceptions associated with it. If you are planning to file innocent spouse tax relief but need a better understanding, read about the myths, criteria for qualification, and steps to claim relief.
What is Innocent Spouse Tax Relief?
As mentioned earlier, when filing jointly, both spouses are equally liable for all taxes, interests, and penalties that arise from the joint return—even if the couple gets divorced or only one spouse earned all the income or claimed deductions. There can be, however, a case wherein one spouse is innocent of the other’s tax debts, which is why the IRS has innocent spouse tax relief in place to help the innocent spouse get relief from tax debts. It provides one spouse relief from additional taxes due to the understatement of the other spouse of whose errors they were not aware of.
Busting 5 Common Myths About IRS Innocent Spouse Tax Relief
In this section, we burst five myths about the IRS Innocent Spouse tax relief. Read on.
Myth 1: Innocent Spouse Tax Relief is a lengthy procedure
Fact: The duration of the Innocent Spouse tax relief process is about 5 to 6 months, after which a final determination is made. During the processing time, the IRS asks for your tax information and contacts the non-requesting spouse.
Myth 2: Taxpayers should wait to file Innocent Spouse Relief
Fact: Taxpayers need not wait to file their innocent spouse tax relief. You can file your current return, and the IRS will not hold any refund that is due.
Myth 3: Both spouses cannot request relief
Fact: According to the IRS, each spouse has the right to file a Form 8857 to request innocent spouse tax relief from a number of liabilities, such as tax, interest, and penalties.
Myth 4: Relief can be filed in cases of Tax Understatement
Fact: You may find many situations in which you owe tax that is actually owed by your spouse. You and your spouse, for instance, file a joint return that reports $10,000 of income, but you knew that your spouse was not reporting $5,000 of dividends. In such a case, you will not be eligible for innocent spouse relief if you were aware of the understatement.
Myth 5: Spouses can reapply for relief after being denied by the IRS
Fact: Spouses cannot reapply for relief after being denied by the IRS. The only time you can reapply for relief is if the relief was denied because you were still considered married at the time the request for relief was filed and you now want to separate the liability.
Qualification Criteria for Innocent Spouse Tax Relief
During the last few years, the IRS has relaxed many of the qualifying factors for the innocent spouse’s, such as adding a 2-year grace time for the Tax Relief (after the initiation of collection actions). Though the procedure for applying for the relief is now easier, the taxpayer must be aware of the qualifying criteria for a successful resolution.
Who qualifies for innocent tax relief?
Under Innocent Spouse Tax relief, a spouse can file for tax relief from the tax liability of the other spouse, only if they fulfill the stipulated eligibility criteria. That said, married couples who have jointly filed for tax returns can apply for Innocent Spouse Relief, even if they have separated. If you are planning to file for the Innocent Tax Relief, you must meet the following criteria:
- You had jointly filed the tax return, but the return had an understatement of tax because of one spouse’s intentional or unintentional error(s).
- When you filed or signed the joint return, you were not aware of the understatement of the tax.
- All facts and circumstances prove you innocent.
If you believe you fulfill one of the mentioned criteria for filing the Innocent Spouse Tax Relief, you can begin to file your claim.
3 Steps to Claiming IRS Innocent Spouse Tax Relief
1. File IRS Form 8857
If you believe that you qualify for innocent spouse tax relief, you can file IRS Form 8857. This is the first step to getting relief from joint tax liability. The form is seven-pages long and covers many questions about your situation and how you specifically qualify for the relief. The form also includes questions about your education, qualification, and profession. This information helps to determine whether you are in a position to have known if something was wrong with your tax filing. Attach all the necessary documents that support your claim. Be careful when filing, as any misleading answer can lead to rejection of your petition.
2. Draft an Innocent Spouse Relief Letter
If you are a victim of abuse from your spouse or ex-spouse, then drafting a letter is essential. Even if it is not required, it is good practice to draft a letter to strengthen your claim. The IRS Form 8857 might not provide enough space to explain your issue. A letter allows you to provide detailed information on why you should be eligible for innocent spouse relief. Also, do not forget to attach all documents that support your claims.
3. Mail the Documents
Once you are done filling out the form, drafting a letter, and attaching other essentials, send the documents to the IRS office via postal service or private carriers such as FedEx or UPS. Or fax the form and attached documents. It is important to write your name and contact number on the letter or any other documents before you mail.
Once you file the request for relief from joint liabilities, the IRS would notify your spouse of your request and allow him or her to provide justifications regarding your claims.
Caution
There are certain situations when you should not File form 8857. Some of them are:
- Your answer to the first question on Form 8857 is NO.
- You already entered into a closing agreement with the IRS for the same liability
- You have accepted an offer in compromise with the IRS
- The court reviewed your case but did not approve .
Final Words
The process of filing form 8857 for innocent spouse tax relief is not easy. It is, therefore, advisable to consult a professional IRS tax attorney to solve your tax-related issues. If you are looking for an IRS attorney in Fort Worth, Texas to get relief from joint tax liability, the Law Office of Nick Nemeth is the best option. Nick Nemeth and Jamie Flores are tax attorneys who specialize in solving IRS tax debt issues along with their team of skilled and experienced tax professionals. Fill out the contact form or call at (817) 623-5399 and request a free consultation to discuss your problem with the professional tax attorneys in Fort Worth. You can also email us at info@myIRSteam.com
