In general, many married couples choose to file joint income tax returns when filing their taxes each year. This is partly because filing a joint income tax return offers a variety of tax benefits to married taxpayers. In such a scenario, both spouses can be held liable as either independents or jointly for any taxes, tax interest, or penalties associated with a joint income tax return. A spouse may even be held liable if the couple files for divorce later on.
For instance, one spouse may be held legally responsible for the full amount of taxes owed even if the other spouse was actually the one that put them in debt and owed that tax.
In some cases, a spouse may be able to claim relief by requesting that they be declared as an innocent spouse. Being able to prove you should receive innocent spouse tax relief, will essentially release you from having to pay any additional taxes owed on a joint tax return that belong solely to your spouse.
For example, if your current or former spouse failed to report income or tried to claim improper tax deductions, then you may be able to file for innocent spouse tax relief if you can prove you were not aware of their actions.
An “innocent spouse” may be defined as an individual who was not involved in the filing of any joint income tax returns during the course of their marriage. Upon divorce, an innocent spouse can still be held liable for any tax liabilities received in connection with a joint tax return that contained mistakes or information and was filed by their spouse. However, they may be able to seek relief by claiming they were an innocent spouse.
If an innocent spouse is able to obtain tax relief from their debts or liabilities, then they will not be required to pay any taxes, tax interest, or penalties associated with a joint tax return after they get divorced. This is just one of three types of tax relief that an innocent spouse may seek. The other two forms of tax relief that may be available after a couple gets divorced include equitable relief and separation of liability.
How Can I Get Innocent Spouse Relief?
If a taxpayer believes that the IRS and/or a former spouse treated them unfairly by demanding that they pay back all of the income tax debt incurred over the course of a marriage, then they may be able to claim that they are eligible for relief as an innocent spouse. The taxpayer who is claiming this status will need to prove a number of different factors, including demonstrating to the IRS that they were an innocent spouse throughout the duration of their marriage.
Some background information that the IRS may take into consideration include the following sets of factors:
- The education level of each individual spouse;
- Whether the claiming spouse was coerced, threatened, or under duress to participate in the scheme;
- Whether the other spouse forged their signature on the couples’ joint tax return forms;
- Whether the other spouse subjected them to physical or mental abuse during the marriage; and
- If the spouse filing the request for innocent spouse relief was truly unaware and had no knowledge of the tax deductions that the other spouse was taking when they filed their joint tax return.
In addition, there are also other factors that the IRS may consider when making its decision as well as other requirements that the spouse filing the request for innocent spouse relief will need to meet. These will be discussed in further detail in the section directly below.
What are the Requirements to Receive Innocent Spouse Relief?
There are several requirements that must be met before a taxpayer will be declared as an innocent spouse. Generally speaking, in order to meet the requirements and be declared eligible for tax relief as an innocent spouse, a taxpayer must be able to prove the following:
- That the taxpayer filed a joint tax return that contains a deficiency or lower tax amount, but it is only related to their spouse’s income or error. For example, if a taxpayer’s spouse had additional income from another source, but chose not to report it on the couples’ joint tax return;
- The taxpayer must establish that at the time they signed the joint tax return form that they were not aware of the error in question or unreported tax amount; and
- Finally, the taxpayer will have to show that it would be unfair to hold them liable for the error, unreported tax, or understated tax amount.
As discussed above, the IRS will also consider a number of additional factors, such as the education level of each spouse and whether the other spouse was under duress to sign the tax return, in making their determination as to whether a spouse should be declared as an innocent spouse for the purposes of tax relief.
How Long Do I Have to File for Innocent Spouse Tax Relief?
In most cases, a taxpayer will have up to two years from the date they were first made aware of a tax liability to file for innocent spouse tax relief. The IRS will normally notify a taxpayer in the form of a letter that states how much the taxpayer owes them, or alternatively, how much money the IRS is subtracting from the taxpayer’s most recent income tax return in order to apply it to those outstanding debts.
However, if the requisite two-year deadline has passed, but a taxpayer believes that they never received a letter or any other notification from the IRS, then the taxpayer may be able to claim that there is an exception to the two-year filing deadline. For instance, if the IRS mailed all notifications or letters to their old mailing address instead of their current one, despite the fact that the taxpayer had alerted the IRS to their change of address.
How Can I Get Back the Money the IRS Took?
If the IRS has already taken money from a taxpayer’s individual tax return to cover existing debts from a prior marriage, then the taxpayer may file an appeal with the IRS to have that money returned. In most instances, the IRS will typically return the levy obtained from a taxpayer’s most recent tax filing year. However, a taxpayer may be able to request an appeal for a refund of a levy placed on previously filed income tax returns.
For example, suppose Bob and Barb were married from 2010 to 2015. During this time, Bob took care of filing their taxes, but unbeknownst to Barb, provided false information on their taxes. In 2015, the couple filed for divorce and Barb then had to file an individual income tax form for that year. Upon filing, Barb was alerted to a tax debt claimed in 2016 when the IRS used the refund received from Barb’s 2015 income tax return to pay off a debt during the marriage.
Since Barb was not aware of any tax debt that was owed until 2016, Barb will have until 2018 (i.e., two years from the time of notice) to request to be declared as an innocent spouse and have the amount used from the 2015 income tax refund returned, as opposed to using it to pay off whatever debt Bob asked the IRS to apply it to in the past.
Do I Need a Tax Lawyer?
It is very difficult to obtain the status of an innocent spouse. Not only does it require having thorough knowledge of the applicable laws, but it also requires filling out a lot of legal paperwork and gathering the necessary evidence for proof. Therefore, you may want to consider hiring a local tax lawyer to further guide you through the process of being declared as an innocent spouse.
An experienced tax lawyer will be able to assist you in collecting evidence, filing the proper legal documents, and answering any questions you may have about the overall process. Your lawyer can help you to resolve any related debt issues and get back any payments that may have belonged to you that your spouse used to pay off a debt during your marriage.
In addition, your lawyer will also be able to provide legal representation during any legal proceedings connected to the matter and can negotiate with the IRS on your behalf.