Innocent Spouse Relief
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Innocent spouse relief relieves the taxpayer of any tax debt
incurred due to a spouse or former spouse who neglected to pay the joint IRS
tax debt. If you qualify for Innocent Spouse, you can be relieved of all the
tax debt you owe. The IRS will not take any collection action, levies or liens,
against you once you qualify. Also, once you are eligible for innocent spouse
relief, you don’t have to worry about that tax liability anymore. It is not
reviewed by the IRS.
Innocent spouse relief is one of the hardest resolutions to
qualify for. You must prove your innocence in the tax debt to the IRS. This can
require a lot of paperwork and proof and that can be hard to obtain and
substantiate.
Tax resolutions vary in all aspects and its best to get
professional advice on which options would be available to you. Each resolution
comes with its pros and cons, and what works for you will depend on your
financial situation. Click the link below to download the free
infographic “Types of IRS Tax Debt Resolutions” and strategize a plan.
When you file a joint return with your spouse, both of you are
fully responsible for the taxes. For example, if $20,000 is owed for a joint
tax return, you and your spouse owe the IRS $20,000.
If you are now separated, and your ex-spouse caused the tax
problem, you may qualify for IRS Innocent Spouse Relief.
THREE TYPES OF IRS INNOCENT SPOUSE TAX
RELIEF
There are three different types of IRS Innocent Spouse Tax
Relief.
1) Innocent Spouse Relief – Your spouse
failed to report income or took too many write-offs. As a result, the IRS
charged additional taxes. You might qualify for Innocent Spouse Relief if you
had no idea your spouse did not prepare the tax return correctly.
2) Separation of Liability Relief – Your spouse
failed to report income or took too many write-offs. As a result, the IRS
charged additional taxes. You did know your spouse made some errors
on the tax return. You may qualify for Separation of Liability Relief if you
are widowed, legally separated, or not living together for at least one year.
3) Equitable Relief – If you do not
qualify for Innocent Spouse Relief or Separation of Liability Relief, you may
still be eligible for Equitable Relief under certain circumstances.
INNOCENT SPOUSE RELIEF – TYPE 1
EXPLAINED
You qualify for Innocent
Spouse Relief if your spouse made an error on the tax return
and you did not know it. It would be unfair to make you responsible
for the taxes.
The IRS will review the two aspects of the innocent spouse
relief: ‘you did not know it’ and ‘it would be unfair.’
Aspect 1 – The IRS will
determine if you actually knew of the errors or you should have known.
Aspect 2 – The IRS will review the following:
– Did you benefit from the mistake made by your spouse?
– Did your spouse leave you?
– Did you separate from your spouse?
– Will you suffer financially?
– Did your spouse abuse you?
SEPARATION OF LIABILITY – TYPE 2
EXPLAINED
You may qualify for Separation of Liability relief if your
spouse made an error on the tax return, you did know it, and you are
separated from your spouse. The following are considered separated from your
spouse:
– Divorce
– Widowed
– Legally separated
– Lived apart for longer than one year
For this type of tax relief, the IRS will separate the taxes.
You will be responsible for only your portion. If you paid your taxes or did
not work, you may remove all taxes.
EQUITABLE RELIEF – TYPE 3 EXPLAINED
You do not qualify for Innocent Spouse Relief or Separation of
Liability, but it would be unfair for you to owe the taxes. You may be eligible
for Equitable Relief. To show ‘unfairness,’ the IRS will review the following:
– Are you separated, or is your spouse temporarily gone due
to illness, imprisonment, military, or business?
– Would you suffer financially?
– As part of the divorce, did your spouse agree to pay all the taxes?
– Did you benefit from not paying the taxes?
– Did you pay your taxes?
– Did you know about the mistakes?
– Did your spouse abuse you?
– Were you in poor mental or physical health when the tax return was signed?
If you qualify for one of three IRS Innocent Spouse Tax Relief
types, the IRS will remove a portion of the taxes or all taxes.
IRS Innocent Spouse Tax Relief is different from IRS Injured Spouse Tax
Relief, which is requested when your spouse owes the taxes, but you do not.