If you are in a marriage and have filed joint tax returns, you may be responsible for the tax liability of your partner. Joint tax returns hold both individuals liable for any tax debt. The IRS may take money from one spouse’s refund in order to pay for the other spouse’s tax debt. The requirements for filing an Innocent Spouse Relief are the following: a taxpayer filed a joint return with an understatement of tax, the understatement was due to an error, the taxpayer must admit that they were unaware of the understatement of tax, the IRS must decide that it would be unfair to hold the “innocent” taxpayer liable for the error, and the request must be submitted within 2 years from when the joint tax return was submitted to the IRS.
If a person involved in a jointly filed tax return believes that the other person in the return may have tax liability, they may want to file IRS Form 8857 (Innocent Spouse Relief). If the IRS sends a notice of tax liability or if the IRS is proposing to increase your tax liability, you may want to look into filing an IRS Form 8857 that may remove the tax liability of your spouse from your portion of tax refund. IRS Publication 971 provides details on who can file for Innocent Spouse Relief and the process of submitting the forms associated with the relief program.
There are three types of Innocent Spouse Relief available to taxpayers that are eligible.
- Innocent Spouse Relief – provides relief from taxes owed to the IRS due to one spouse not reporting income, improper reporting, or trying to claim improper deductions
- Separation Of Liability Relief – provides allocation of tax owed between spouses due to an item not being properly reported on a joint return. The allocation will allow each spouse to being responsible for only the amount they are responsible for paying
- Equitable Relief – If a person is not eligible for Innocent Spouse Relief or Separation of Liability Relief, they may qualify for Equitable Relief if there is an item not properly reported on a joint tax return and the responsibility is attributed to only one spouse. Also if the appropriate amount of tax was on the joint tax return, but taxes are left unpaid, an individual may be eligible for Equitable Relief
The IRS will contact the other individual in a joint return to notify them that an IRS Form 8857 has been submitted. This may be an issue for individuals that are divorced or separated and do not wish to communicate with the other individual about tax returns. However all private information (address/work/income/assets) will not be revealed to other person on the joint tax return. The request for Innocent Spouse Relief may take up to 6 months to process and all tax returns should be filed in the meantime.