When you file your taxes, it matters whether you’re married or not. Many married couples decide to file jointly, which can provide a few significant tax benefits. But this filing status also means that both parties are liable for the other’s tax liability.
However, being married also may qualify you for forms of tax relief called injured spouse or innocent spouse relief. Injured spouse relief may apply if part of your own tax refund was used to cover your spouse’s tax balance or outstanding child support. Innocent Spouse Relief may apply if your spouse underreported their income or failed to pay appropriate taxes on your joint tax return without your knowledge. Both forms of relief aim to help you avoid liability when your spouse owes taxes or makes a mistake.
However, both cases have different eligibility requirements, implications, and potential outcomes. They’re not the same thing, even though taxpayers often think they are.
Find out the basics of injured spouse vs innocent spouse, eligibility criteria, legal rights of spouses, and frequently asked questions about IRS spousal relief.
Injured vs Innocent Spouse: What’s the Difference?
You’re an injured spouse if you file a tax return with your spouse, and then the IRS seizes your joint refund to cover your spouse’s debts, which may include old tax debts, child support, or state unemployment debts. You’re an innocent spouse if you file a joint return (or a separate return in a community property state), and your spouse understates the tax due without your knowledge or consent, and that causes you to be responsible for a tax debt that you were unaware of. You may also qualify for innocent spouse relief if there are unpaid joint taxes that you did not know or have reason to know were unpaid.
You may also qualify as an innocent spouse in cases where you knew about the understatement of tax but were coerced into signing the return. This program can also apply if your spouse dies or leaves the country, leaving you with an unexpected tax debt.
Most of the time, spouses must have filed jointly for injured or innocent spouse relief. However, states with something called community property laws work a bit differently.
Understanding Community Property States
In non-community property states, spouses who file separately are not responsible for their spouse’s tax debts. So, they wouldn’t be on the hook for their spouse’s unpaid debt if that spouse left the country, for example. This means couples filing separately in states without community property laws wouldn’t need to request innocent spouse relief since they’re usually not liable anyway.
In community property states, however, even spouses who file separately are held responsible for their spouse’s tax debt. In these states, you can apply for relief no matter your filing status with your partner.
Nine states currently have community property laws in place:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Texas
- Washington
- Wisconsin
Identify what your specific state laws entail when you’re trying to figure out whether to apply for innocent spouse relief. Always ask a tax expert, like a tax attorney, if you’re unsure.
Eligibility Criteria for Injured and Innocent Spouse Relief
Not all married couples will qualify for this form of IRS tax relief. Understanding eligibility requirements will help you nail down your options when you’re dealing with an issue. Here are the details:
- Injured spouse relief eligibility requirements:
- You filed a joint tax return with your spouse.
- Part of your tax refund was used to cover your spouse’s debt.
- You were not responsible for that tax debt.
- Innocent spouse relief eligibility requirements:
- You filed a joint return with your spouse, or you live in a community property state and filed separately.
- You are applying for relief for joint tax debt that your spouse is responsible for, not your own income taxes or household employment taxes, individual shared responsibility payments, business taxes, or trust fund recovery penalties.
If you meet these eligibility requirements as a spouse, you have a legal right to request spousal relief from the IRS related to tax debt. This form of tax relief can be a huge benefit when something goes awry with your spouse’s tax reporting or financial situation.
There is another type of Innocent Spouse Relief called Separation of Liability. This type of relief separates your liability from your ex-spouses, so you are only on the hook for your own unpaid taxes. In addition to the general criteria above, you must be divorced, widowed, or separated from your spouse to qualify. This may be an option for handling back taxes after divorce.
Filing Process for Injured Spouse Relief
When you decide to request injured spouse relief – that is, when you’re trying to reclaim your refund that was used for your spouse’s tax debt – you have three years from the filing date or two years from when you paid the tax, whichever is later.
Your required IRS form to submit this request is Form 8379, Injured Spouse Allocation. The IRS may take up to eight weeks to approve your request.
You will initially receive an IRS notice that outlines the refund amount you were owed, how much of that money was applied to your spouse’s tax debt, and information for contacting the IRS. Follow all instructions to contact the agency or reply.
Filing Process for Innocent Spouse Relief
The process for innocent spouse relief is a bit different. You will learn about the tax return mistake or tax debt owed by your spouse through an IRS notice of an audit or taxes due. You have two years from getting this notice in the mail to reply with your request for innocent spouse relief. There is a form of Innocent Spouse Equitable Relief that is available if you miss this deadline.
The form for this type of relief is Form 8857, Request for Innocent Spouse Relief. According to the IRS, you can expect an even longer wait for this form, up to six months.
Always pay close attention to what the agency notices tell you. Follow all instructions accordingly, including what to do if you disagree with the provided information. Talking to a tax attorney about your notice can help.
Implications for Injured vs Innocent Spouse Relief
The IRS offers spousal relief so that innocent or injured spouses aren’t on the hook for their partner’s debts or mistakes. Without this kind of relief, you may have to take responsibility for large amounts of debt when your spouse leaves the country, dies, underreports income without your knowledge, or has a larger tax bill than you expected.
If your spouse underreporting or leaving the country, you could face financial and legal repercussions without spousal relief. You will be held liable for underpaid tax debt, even if you had nothing to do with it. This is why you need to request relief in these unfortunate cases.
Remember that you can apply for IRS spousal relief if you meet the applicable eligibility requirements. It is your right as a spouse to request relief if you qualify, so don’t delay when you’re in one of these situations.
Getting Help with IRS Innocent or Injured Spouse Relief
Injured spouse or innocent spouse relief can be a game-changer if you’re married and a problem comes up with your spouse’s taxes. You can apply for relief to help you avoid responsibility for their tax debt or reclaim some or all of your tax refund.
If you’ve determined that you’re an injured or innocent spouse, you don’t have to face the agency on your own. As soon as you’re aware of the issue, talk to a tax professional. An expert will break down the law for you to help you understand your options.
At Wiggam Law, we’re focused on helping our clients get the results they’re looking for. We customize our solutions so that the way forward meets your unique needs.
Contact Wiggam Law today for a consultation with our legal team.
FAQs on Injured and Innocent Spouse Relief
Are injured spouse and innocent spouse the same thing?
No, these terms refer to two different types of tax relief the IRS offers. An injured spouse is someone whose tax refund was used to cover their spouse’s tax debt, and an innocent spouse is someone who wasn’t aware of a tax mistake by their spouse or whose spouse left the country without paying their debt.
How do I apply for injured spouse relief?
Use Form 8379, Injured Spouse Allocation, to apply for injured spouse relief. You have three years from the date of the initial tax filing to request this relief.
How do I apply for innocent spouse relief?
As an innocent spouse, you’ll use Form 8857, Request for Innocent Spouse Relief. You have two years from receiving the IRS notice in the mail to apply.
How do I know if I’m an innocent or injured spouse?
Not all joint filers or spouses are eligible for spousal relief with the IRS. For injured spouse relief, you must have filed jointly, and part of your tax refund was used to cover your spouse’s tax debt for which you weren’t responsible.
For innocent spouse relief, you must have filed a joint return or lived in a community property state, and you can only ask for relief for your spouse’s tax debt, not yours.
What if I live in a community property state?
The nine states with community property laws have different requirements. In these states, even spouses who file separately can be held liable for their spouse’s tax debts. This means that if you filed separately and live in a community property state, you can still apply for innocent spouse relief when you do not believe you should be held responsible for your spouse’s tax debts.
If you do not live in a community property state and filed separately, you wouldn’t normally be held liable for your spouse’s tax debts.
What states are community property states?
Nine states have community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
What is equitable relief? Am I eligible?
You could also get something called equitable relief from the IRS if you don’t qualify for separation of liability relief or innocent spouse relief. The IRS will review your information and situation to determine whether it’s unfair for you to be held responsible for your spouse’s underpayment of tax or understatement of income.
Get Injured and Innocent Spouse Help Today
Do you still have questions about the difference between an injured and innocent spouse? Call us today at (404) 609-1300 or fill out our online consultation form to schedule a meeting with one of our tax attorneys.