Innocent Spouse Tax Relief provides you relief from additional tax you owe if your spouse or former spouse failed to report income, reported income improperly or claimed improper tax deductions or credits.
Many married taxpayers choose to file joint tax returns because of certain benefits this filing status allows. Both spouse taxpayers are jointly and independently responsible for the tax and interest or penalty due to the joint filing and can even be liable if they later divorce. One spouse may be held responsible for all tax due even if the other spouse owed the income.
An "innocent spouse" is a person who was not involved in the filing of any joint income taxes during her marriage. Upon divorce, the innocent spouse is responsible for the tax liability that occurred due to her former spouse’s misfiling of their taxes.
In some cases, a spouse will be relieved and does not have to pay the tax, interest or penalties on a joint tax return after divorce. Three types of relief are available after divorce for a ex-spouse:
- Innocent spouse relief
- Separation of liability
- Equitable relief
How Can I Get Innocent Spouse Relief?
If you believe that the IRS and/or your former spouse treated you unfairly by making you pay back all of the income tax debt from your marriage, then you may qualify for Innocent Spouse Relief. To do so, you must declare and prove to the IRS that you were an Innocent Spouse throughout your marriage.
The IRS considers a number of factors:
- Education level of each spouse
- Forging signatures on tax forms
- Mental and physical abuse
- Unawareness and knowledge of the tax deductions taken
What are the Requirement to Receive Innocent Spouse Relief?
To be eligible for innocent spouse relief you must meet all of the following requirements:
- You filed a joint tax return that has an understatement of tax or deficiency that is only related to your spouse’s flawed item;
- This item includes income received by your spouse but not reported on the joint tax return.
- You must establish that at the time you signed the joint tax return you didn't know that there was an error or understatement of tax; and
- It would be unfair to hold you liable for the understatement of tax
How Long Do I Have to File for Innocent Spouse Tax Relief?
Innocent Spouse Relief must be filed within two years from when you were first notified of the tax liability. Notifications usually come in the form of a letter from the IRS stating how much you owe them and/ or the IRS taking your current year’s income tax return to apply to your debt.
However, if 2 years have gone by and you believe you never received the IRS notification, you may argue an exception to the 2 years filing deadline. For example, the IRS mailed all of the notifications to an old mailing address instead of your current mailing address.
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How Can I Get Back the Money the IRS Took?
If the IRS has taken your own individual income tax return to cover the tax debt from your previous marriage, then you may appeal to the IRS and get the money back. Generally, the IRS will return the latest tax year’s levy. However, returning any extra years may be possible.
Example: Jane and John were married from 2005 to 2010, where John lied on their taxes. They got a divorce in 2010, and Jane filed her individual income taxes. However, she was notified of a tax debt in 2011 when the IRS took her 2010 income tax return to pay off her tax debt from when she was married. Because Jane did not know of any tax debt, Jane has until 2013 (2 years from notice) to be declared an innocent spouse and get her 2010 income tax return back.
Do I Need a Tax Lawyer?
Declaring yourself as an Innocent Spouse requires a lot of paperwork and evidence. A tax lawyer may work with you to file all your necessary evidence and declarations. Thus, you will be cleared of your debt and will get back any levy made.