Innocent Spouse Tax Relief

If you and your spouse filed a joint tax return, the IRS considers each of you jointly and severally liable for any tax debt. This means that each taxpayer is legally responsible for the entire debt. However, if you filed a joint return but your spouse made errors or omitted information that has led to additional taxes, you might be able to claim innocent spouse relief, which absolves you of responsibility for the debt and any penalties and interest incurred.

You and your spouse are jointly and severally liable for any tax debt even if only one spouse earned all the income in your household or you have a divorce decree that states your ex-spouse is responsible for tax debt from past joint returns.

However, if your spouse or former spouse failed to report or misreported income, or claimed improper credits or deductions of which you had no knowledge, and you believe that only they should be responsible for the resultant tax liability, then you can apply for innocent spouse relief from the IRS.

Generally, you must have not known that your spouse or ex-spouse made these errors at the time of filing, but there are exceptions for victims of domestic violence who were coerced into not challenging the error.

Claiming innocent spouse relief can relieve you of additional taxes, plus penalties and interest. The IRS has specific innocent spouse rules, which begin with a timely filing of Form 8857.

Form 8857, Request for Innocent Spouse Relief, is the form to file if you believe your current or former spouse should be solely responsible for any tax debt. If multiple returns are involved, you do not have to file more than one Form 8857.

While the seven-page form includes numerous questions about your situation, including your involvement in the finances and return preparation, as well as why you should be granted relief; you can also include a letter stating your case and attach extra pages further detailing any answers.

The form details any required documents to include with your filing, such as a divorce decree or separation agreement. You should always write your name and social security number on any attachments.

If you do not qualify for innocent spouse relief, you can seek:

• Separation of Liability Relief – This applies to taxpayers who are no longer married, legally separated, or have been living apart for 12 months prior to filing a claim.
• Equitable Relief – This applies to taxpayers who do not qualify for either innocent spouse or separation of liability relief. In this case, the IRS considers the facts and circumstances and might decide it is unfair to hold you liable for an underpayment or understatement of tax.

In both cases, you must first file Form 8857.

When it comes to spousal claims, it is important to know that while they sound similar, an innocent spouse and an injured spouse are two totally different claims.

Form 8857 should be used for Innocent Spouse Relief — debt that you believe a former spouse should be responsible for.

An Injured Spouse claim refers to a spouse who has been affected by the application of a joint tax refund to offset their spouse’s debts. Because they have been financially harmed (“injured”) by the IRS seizing their refund, that spouse is able to reclaim their share of the refund from the IRS.

You can file innocent spouse relief any time within two years from the date the IRS first attempted* to collect unpaid taxes from you and your spouse or ex-spouse. Even if you do not have all the required documentation on hand, you should file Form 8857 as soon as you have knowledge of their omission or error.

* An IRS “attempt” refers to any IRS notice you receive that 1) alerts you to an additional tax liability or 2) informs you that the agency is proposing an increase in tax liability.