Innocent Spouse

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When married individuals choose to file a joint tax return both taxpayers are jointly and individually responsible for the tax and any interest or penalty due on the joint return that was filed.  If the couple happen to legally separate or divorce, they remain jointly liable for the tax liability on any returns they filed jointly.  However, under Innocent Spouse Relief there are certain circumstances where one spouse can be held solely for the entire tax liability.

Relief from joint and several liability currently falls into three categories: Innocent Spouse Relief; Separation of Liability; and Equitable Relief.

To qualify for innocent spouse relief, you must meet all of the following conditions:

  • You must have filed a joint return which has an understatement of tax;
  • The understatement of tax must be due to erroneous items of your spouse;
  • You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understatement of tax;
  • Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understatement of tax; and
  • You must request relief within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998.

Under Separation of Liability, you divide (separate) the understatement of tax (plus interest and penalties) on your joint return between you and your spouse. The understatement of tax allocated to you is generally the amount of income and deductions attributable to your earnings and assets.

Equitable relief is only available if you do not qualify for innocent spouse relief or the separation of liability election and the IRS determines that it is unfair to hold you liable for the understatement of tax taking into account all the facts and circumstances.

 

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