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Understanding Innocent Spouse Tax Relief

August 29th

innocent spouseThe IRS recently made a landmark change to the Tax Code when they relaxed the requirements to qualify for Innocent Spouse tax relief. While they have extended the application period past its old two-year limit, many individuals still do not understand fully what this means.

Many potentially qualifying individuals do not even know that they can receive these benefits. It is important to understand fully when you might be liable for tax debt, and when you can avoid it through innocent spouse relief.

Requirements for Innocent Spouse Relief

There are three basic requirements to qualify for innocent spouse relief:

  1. There is an understatement of tax due to erroneous items from the other spouse.
  2. The “innocent spouse” did not know of any wrongdoing, nor would have any reason to know that there was an understatement of tax by the other person.
  3. It would be unfair to hold the innocent spouse accountable for the tax amount owed by the guilty party.

Often, those who qualify for innocent spouse relief are separated or divorced from the guilty party. In other situations, qualifying applicants might be those who were coerced or forced to sign a joint tax return.

Applying for Innocent Spouse Relief

If you think you might qualify for innocent spouse relief, you may apply by filing and IRS Form 8857. This one form provides the means by which you can qualify for the three different kinds of innocent spouse relief available – classic relief, equitable relief, and relief by separation of liability. If you owe over $8,000 to the IRS it is advisable to seek the assistance of a qualified tax professional for the application process.

The most common reason that innocent spouse relief is denied is because the applicant cannot prove they had no knowledge of wrongdoing. It is therefore vital to show appropriate documentation to support assertions of innocence.


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