Innocent Spouse Relief: Who Qualifies & How to Apply

While both forms of tax relief involve marital tax issues, Innocent Spouse Relief and Injured Spouse Relief address different situations between a taxpayer and their domestic partner. Innocent Spouse Relief relieves tax liability if you were oblivious to your spouse’s incorrect reporting, while Injured Spouse Relief reimburses your tax refund if it was seized to pay their debt. If you are dealing with a tax-related marital dispute, it’s important to determine which application is right for you.

If you were unaware of your spouse or former spouse’s financial misrepresentations, you may be relieved of the resulting tax debt with Innocent Spouse Relief. These responsibilities include any taxes, interest, or penalties caused by your spouse improperly inputting information on your joint tax return.

Injured Spouse Relief protects taxpayers whose share of a tax refund has been used to pay their spouse’s legally enforceable debt. This situation commonly occurs when your joint tax refund is seized to cover your spouse’s overdue liabilities, such as child support, federal or state taxes, or state unemployment compensation debts.

If your circumstances match this, you may qualify as an “injured spouse” and can request your portion of the refund back. This ensures you keep your rightful share of a tax refund despite tax debts that belong solely to your spouse.

• You filed your tax return jointly.
• You have evidence that your spouse filed the joint return improperly or it displays an understatement of tax due to “Erroneous Items.”
• Upon signing the return, you did not know that your spouse filed the return incorrectly.
• You reside in a community property state.
• Under specific conditions, being held responsible for unpaid taxes would be unfair.

Erroneous Items are essentially items that were either incorrect or left out of a return. Some of the most common erroneous items include items that went unreported or incorrect deductions, credit, or basis claimed by the spouse. (Ex. claiming a deductible on a state fine for your business as fines that are not deductible)

• You filed your tax return jointly.
• Your tax refund was used for your spouse’s debt. 
• You were not responsible for your spouse’s debt. 
• You may also be eligible if you live in a community property state and filed separate returns.

Filing jointly vs. separately can be a pivotal factor in whether you can or cannot file for innocent spouse relief. Although filing jointly has many benefits for married couples, it doesn’t mean one spouse should handle all the filings. 

Many widowed or divorced spouses have no idea what was happening with their taxes because their spouse handled everything for them—or so they thought.

It’s certainly more convenient when you’re filing jointly to allow one spouse to handle everything related to the taxes—especially when one spouse is a stay-at-home parent or is unable to work. Filing for two can be a tedious task without the help of a tax professional.

Remembering to file can be difficult, though we do our best to set reminders and mark calendars. We’re human, and spouses often forget to file taxes or fear telling their significant other about their financial mistakes.

Taking on tax problems for the first time in several years, without much context to your spouse’s actions, can feel overwhelming.

The best thing you can do to resolve your tax problems with the IRS is to get professional help. Trusted tax professionals can evaluate your tax issue, bring you back into IRS compliance, and develop a personalized plan to ensure you get the most favorable outcome for your situation. 

A reputable tax professional can ensure you don’t end up owing more than you should by maximizing your tax credits and deductions and removing tax penalties. If you think you may qualify for Innocent Spouse Relief, we can assess your situation in a free tax consultation and help you find your path to IRS relief.

When applying for spouse tax relief, the IRS will automatically check your eligibility for these additional types of relief. Here’s what you may be eligible for:

If you are no longer married or living with your former spouse, a Separation of Liability provides relief from paying their understated taxes from a joint return. Any additional taxes due are divided between you and your spouse based on your separate income and assets. 

However, you won’t qualify for this relief if you had actual knowledge of the tax errors when signing the return, or if you and your spouse transferred assets to one another to avoid taxes or commit fraud.

• You and your spouse filed a joint tax return. 
• Errors on the return resulted in understated taxes. 
• You were not aware of the errors.
• You are divorced, legally separated, widowed, or have been living apart from your spouse for at least 12 months.

Equitable Relief is a safety net for individuals who are ineligible for either innocent spouse relief or separation of liability relief. This provides tax debt relief if the IRS determines that holding you responsible for your spouse’s understated or underpaid taxes is unfair. 

Understated taxes include your spouse not reporting all income earned, taking ineligible deductions or credits, or not accurately reporting asset values.

• You and your spouse filed a joint tax return. 
• Innocent Spouse Relief or Separation of Liability relief did not apply to your situation. 
• You never transferred assets with the intent to evade taxes or commit fraud. 
• You were not aware of the fraudulent tax return. 
• Based on your complete situation, it would be unjust to hold you liable.

Seeking relief from tax liability linked to your spouse starts with understanding which IRS form best fits your situation. If you owe tax debt because of your spouse’s incorrect reporting, or you just need to get your tax refund back, the application process has different filing requirements. Here are the types of IRS forms needed.

Form 8857 (Request for Innocent Spouse Relief) filing requirements:

• Must be filed within 2 years of an IRS audit notice or taxes due that resulted from an error on your tax return. 
• The IRS is required by law to contact your spouse or former spouse about this. 
• Form 8857 also covers Separation of Liability and Equitable Relief. The IRS will consider your information and apply the relief program that best fits your situation. 

It’s crucial to file Form 8857 immediately upon learning of a tax liability that your spouse or former spouse is solely responsible for. However, you still may be responsible for any interest, tax, and penalties that do not qualify.

Form 8379 (Injured Spouse Allocation) filing requirements:

• You must file Form 8379 within 3 years of your original tax filing date OR 2 years of the date you paid the tax (whichever is later). 
• If a tax return was not filed, Form 8379 must be filed within 2 years of the tax payment.
• Can be filed with your tax return by mail, electronically, or separately.

While one of the eligibility requirements for Innocent Spouse Relief is determined by whether or not you were aware of the erroneous items by your spouse, there is an exception to this rule. 

If you knew about the errors, you may still be eligible for tax relief if:

• You were a victim of domestic abuse or violence before signing the tax return. 
• You did not object to the items on the tax return out of fear.
• You were pressured or threatened to sign the joint return.

We generally recommend seeking professional help to qualify for Innocent Spouse Relief because it can be quite complicated.

Unlike other tax relief programs, Innocent Spouse Relief requires proof that you have no recollection of the unpaid tax balance or incorrect filing. It is best to seek a tax professional to help strategize and present your case to the IRS.

If you need assistance or more information about Innocent Spouse Relief, feel free to call us at 833-419-RISE(7473) or schedule an appointment.