IRS Innocent Spouse Relief Frequently Ask Questions
How does the IRS define actual knowledge?
If you actually knew about the erroneous item that belongs to your spouse or former spouse then innocent spouse relief (ISR) does not apply to any part of the understated tax due to that item. If you knew of the item then both your and your spouse are still held jointly liable for that item.
What is the deadline or time limit for filing for ISR?
The IRS has not really defined a time-limit but has made a proposal to increase the statute of limitations for requesting innocent spouse relief to 10 years.
How does the IRS define reason to know?
If you had reason to know about the erroneous item that belongs to your spouse or former spouse then innocent spouse relief will not apply to any part of the understated tax due to that particular item. If you had reason to know then you and your spouse will remain jointly liable for that item on the tax return.
What does the IRS mean by members of the same household?
You and your spouse are not members of the same household if you are living apart and are estranged. The IRS will consider you and your spouse members of the same household if you reside int eh same dwelling, you live in separate dwellings but are not estranged, one spouse is temporarily absent from the household and there is an anticipation that they will be returning.
What are erroneous items?
Erroneous items can be unreported income or an incorrect deduction, credit, or basis. An erroneous unreported income item would be an item that your spouse or formers spouse received as income but did not report. An incorrect deduction would be an improper deduction, credit, or property basis claimed by your spouse or former spouse.
Will the IRS contact my former spouse?
Yes it is required by law that the IRS contacts your former spouse if you choose to file for innocent spouse relief. There are no exceptions to this law, even if you were a victim of spousal abuse. Your former spouse will be contacted by the IRS and will be given the option to participate in the process.
What forms do I need to file for innocent spouse relief?
In order to file for innocent spouse relief you will be required to submit IRS form 8857 to the IRS. If you were a victim of spousal abuse then it is required to submit a statement detailing the abuse as well. If you were not a victim of abuse it is not required to submit an additional letter but is highly suggested that you include a letter to the IRS to stress the points of how you meet the requirements to qualify for innocent spouse relief.
What is an understatement of tax?
An understatement of tax is the difference between what you reported on your return and what should have been actually reported. With an understatement the amount that should have been reported as owed is greater than what was actually paid.
Can I qualified for an offer in compromise can I still qualify for innocent spouse relief?
No, you cannot qualify for innocent spouse relief if you already qualified and settled your taxes with an offer in compromise.
If I was denied innocent spouse relief can I apply again and try to qualify for separation of liability or equitable relief?
No, if you applied for innocent spouse relief and were denied you cannot apply again for those same years. The IRS considers both separation of liability and equitable relief when evaluating a taxpayers application.
How many years can my innocent spouse relief filing cover?
Your innocent spouse relief filing will cover 3 years. If you want to cover more than three years you will have to file a separate IRS form 8857 to cover the additional years.