What is Innocent Spouse Relief ?
The IRS can sometimes saddle you with a tax bill that is actually the responsibility of your spouse or former spouse. If the actions of your spouse/ex-spouse caused the tax issue and you were unaware of or had no part in those actions, you can use the IRS Form 8857 to request tax resolution called “innocent spouse relief” and apply to have the tax liabilities and penalties removed.
What qualifies for Innocent Spouse Relief?
There are a few different circumstances that qualify as innocent spouse relief. Consider if you fall into one of the following situations:
- You were/are married and filed a joint tax return.
- Your former or current spouse reported income on a joint return incorrectly.
You can prove that when you signed said joint return, you weren’t aware that the income was incorrectly reported.
If you fall into one of the above circumstances, the IRS will consider it unfair to hold you liable for the unpaid taxes and thus grant you innocent spouse relief.
Innocent spouse relief falls into three main types. These include:
- Innocent Spouse Relief
The traditional innocent spouse relief means you can be excused of responsibility for paying tax, interest, and penalties if your spouse did something wrong on your tax return that you had no knowledge of. - Relief by Separation of Liability
Relief by separation of liability means you receive partial relief: you and your spouse divide the understatement of tax, including interest and penalties on your joint return. - Equitable Relief
You may use this claim if you do not qualify for the other two types of innocent spouse relief. If the IRS believes it inequitable or unfair to hold one spouse responsible for tax, interest, and penalties, you may still be relieved through equitable relief. This usually involves the IRS considering more factors such as economic hardship or spousal abuse.
You can include a letter with your form as well as any other information you would like the IRS to consider.
Should you include a Letter with Innocent Spouse Relief Form 8857?
You can include a letter with your form as well as any other information you would like the IRS to consider.
When should you file the Innocent Spouse Relief Form 8857?
It’s important to file Form 8857 as soon as you become aware of a tax liability you believe is related to your spouse. This awareness may arise if the IRS sends you a notice or if they are examining your tax return and proposing an increase in your tax liability.