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Innocent Spouse Relief Is Available, But Difficult to Get

It is common for married couples to file a joint tax return. Most couples save money by filing together. One big disadvantage, though, is that if you file jointly, you are liable for any mistakes or intentional misstatements made by your spouse.

If this happens to you, you can get relief, but it is not particularly easy. To receive what is known as Innocent Spouse Relief, you have to prove to the Internal Revenue Service that you did not know that your spouse was misstating something in the return. Here are some more specific criteria:

First, you need to determine if you will be disqualified from getting Innocent Spouse Relief. Two questions will give a quick answer on this issue:

1. Did you sign a balance-due tax return? If you did, you will not be able to qualify for Innocent Spouse Relief. If you signed, the IRS considers you to be aware of the debt liability. They won't make exceptions.

2. How old is the return? If it is more than two years old, it is generally too late to qualify for Innocent Spouse Relief. You may have an argument if collection activity by the IRS on this return began less than two years ago. If both the year of the return and the beginning of collection activity are/were more than two years ago, you won't qualify. 

After those two questions, there are more criteria for qualifying. You need to meet these conditions:

1. You filed a joint return, and your spouse understated the tax
2. You didn't know the tax was understated
3. Holding you responsible for the understatement would be unfair

If you do not qualify for Innocent Spouse Relief, you still have another option: Equitable Relief. The IRS automatically considers Equitable Relief when they deny a request for Innocent Spouse Relief.

Equitable Relief also has a strict set of criteria:

1. Innocent Spouse Relief is not available to you
2. Under the specific circumstances, the IRS determines that it would be unfair to hold you responsible for the understatement of tax.

One important difference to note between Innocent Spouse Relief and Equitable Relief is that with Equitable Relief you can get relief from underpayment as well as understatement of tax. Underpayment is where the return shows the proper amount of tax due, but the tax has not been paid.

One of the circumstances that the IRS will consider in granting Equitable Relief is spousal abuse. In order to qualify on the basis on spousal abuse, though, you will have to submit a police report and a divorce decree that indicate a finding of abuse.

A request for either form of relief is made with Form 8857, "Request for Innocent Spouse Relief." Most of the requests are denied, but the relief can be substantial for those who qualify and receive the relief.

Source: "What is innocent spouse relief?"

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