The IRS offers four types of Innocent Spouse Relief to protect individuals from being unfairly held responsible for tax debts caused by their spouse or former spouse. These are:
1. Innocent Spouse Relief
Innocent Spouse Relief provides relief from additional tax owed if your spouse or former spouse failed to report income, reported income improperly, or claimed improper deductions or credits on a joint tax return. To qualify, you must prove that you did not know and had no reason to know about the error when you signed the joint return.
2. Relief by Separation of Liability
Relief by Separation of Liability allows you to separate the tax liability between you and your spouse (or former spouse). This means the IRS will only hold you responsible for the tax on the income that you earned. This type of relief is available if you are divorced, legally separated, or no longer living with your spouse.
3. Equitable Relief
Equitable Relief may be available when you do not qualify for Innocent Spouse Relief or Separation of Liability, but it would be unfair to hold you responsible for the tax debt. This type of relief is often used in cases involving understatement or underpayment of taxes. The IRS considers various factors, such as whether you benefited from the underpayment or if there was any abuse or coercion involved in the filing.
4. Relief from Liability Arising from Community Property Law
This relief applies to taxpayers living in community property states where state law requires spouses to equally share income and property acquired during the marriage. In certain situations, you may be relieved of responsibility for tax on income earned by your spouse or former spouse.
How to Apply for Innocent Spouse Relief
To request Innocent Spouse Relief, you must file IRS Form 8857 (Request for Innocent Spouse Relief). It’s important to include all necessary documentation and submit the form within two years of the IRS’s first attempt to collect the tax debt from you.
Each type of relief has specific eligibility criteria, and it’s advisable to consult with a tax professional or carefully review IRS guidelines to determine which type of relief is appropriate for your situation.
