Innocent Spouse Relief: Guides, Types, Rules & Forms
When you file a joint return with your spouse, both of you are liable for all tax, penalties, and interest. Therefore, the IRS or the states can legally go after both spouses or just one spouse for the entire bill. Unfortunately, even if you get divorced and the decree says that your ex is responsible for the bill, the IRS can still go after you. Luckily, there is innocent spouse relief (ISR).
ISR applies in situations where it would be unjust to hold both of you responsible for the tax debt. If you qualify, you are not liable for your spouse or ex-spouse’s tax debt. In some cases, you may just want to split the tax liability. There are three categories of IRS innocent spouse relief.
This is based on the original type of innocent spouse relief. There are specific qualification requirements, and the issue must be related to an understatement of tax owed. Fortunately, if the IRS accepts your request, the IRS does not hold you liable for the tax debt related to your spouse/ ex-spouse.
With this type of relief, the IRS allocates the tax debt between you and your spouse/ex-spouse, as if you filed separately. Allocation does not have to be half and half. It varies based on who’s responsible for what. Furthermore, you must be separated or no longer married to qualify.
You can apply for this type of relief if you have understated or underpaid tax. Equitable relief helps people who don’t qualify for the other types of relief. Therefore, you must prove that it would be unfair for the IRS to hold you responsible.
There are strict filing requirements. It also helps to submit a letter explaining the situation in detail.
Questions and answers to commonly asked questions about innocent spouse relief, equitable relief, and separation of liability
Our tax team can help you decide if you are likely to qualify for innocent spouse relief. Consequently, if you qualify, you can apply for innocent spouse relief with the IRS or the State (if available).