Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows. Both taxpayers are jointly and individually responsible for the tax and any interest or penalties due on the joint return even if they later divorce. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. One spouse may be held responsible for all taxes due even if all of the income was earned by the other spouse. In some cases, however, a spouse will be relieved of the tax, interest, and penalties from a joint tax return. Three types of relief are available to affected persons who qualify: 1) Innocent spouse relief, 2) Separation of liability, and 3) Equitable relief. Each type of relief has different requirements.
You must meet all of the following conditions to qualify for innocent spouse relief:
- You filed a joint return.
- There is an understated tax on the return that is due to erroneous items (defined later) of your spouse or former spouse.
- You can show that when you signed the joint return you did not know or have reason to know that the understated tax existed (or the extent to which the understated tax existed).
- Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated tax.
Erroneous items are either one of the following:
- Unreported income. This is any gross income item received by your spouse or former spouse that is not reported.
- Incorrect deduction, credit, or basis. This is any improper deduction, credit, or property basis claimed by your spouse or former spouse.
Bear in mind that innocent spouse relief is only available to persons who meet each of the conditions listed above. You are still jointly and individually responsible for any tax, interest, and penalties that do not qualify for relief.
Under separation of liability relief, the understated tax, plus interest and penalties, on your joint return is allocated between you and your spouse or former spouse. The understated tax allocated to you is generally the amount you are responsible for. This type of relief is available only for unpaid liabilities resulting from the understated tax. Refunds are not allowed.
To request separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file for relief:
- You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. (Under this rule, you are no longer married if you are widowed.)
- You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file for relief.
In order to qualify for equitable relief, there are several conditions that you are required to meet. Included among them are that you are not eligible for innocent spouse relief, separation of liability relief, or relief arising from community property law, and establishing that, after taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated or underpaid tax.
The attorneys at Tax Muscle have a variety of methods accessible to help alleviate you from a liability incurred on account of your spouse or former spouse. Call us today for a free consultation and let our tax experts help you determine whether and for which type of spousal relief you qualify.
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If you have been contacted by the IRS or State Taxing Agency, or are facing enforced collection action or the threat of such action, then let Tax Muscle do the heavy lifting and resolve your tax problem for good. Call 855.829.6875 today for your free 15 minute tax debt consultation.