Married couples usually file taxes jointly, as 90% of the time this allows for more favorable tax rates rather than when filing separately. However when doing so, each spouse becomes responsible for each other’s taxes, this is called joint liability. Even if you are divorced and the IRS finds inadequately paid taxes, both of you will be responsible for them. However the IRS will ask for a payment from a party that is easiest to reach. If you were unaware of your spouse’s mistake on the jointly filed taxes you are eligible for a tax relief called Innocent Spouse Tax Relief. This allows the “innocent spouse” to avoid paying for tax and tax penalties that were acquired due to mistakes made by the guilty party. However in order to qualify for this tax relief you have to comply with rules and regulations of the IRS.
If you sign a joint return, the IRS may be able to collect any tax relating to that return from you even if your spouse was the one who reported incorrectly. Innocent Spouse relief is one way to avoid being responsible.
Requirements for Relief You’re eligible for relief if you meet the following conditions, which are discussed in more detail below:
- You filed a joint return on which there was an understatement of tax due to an erroneous item relating to your spouse.
- You didn’t know, and had no reason to know, about the understatement when you signed the return.
- Looking at all the facts and circumstances, it would be unfair to make you pay the tax.
- You apply for relief under this provision within two years after the IRS begins trying to collect the tax from you.
If you meet all these requirements, then you don’t have to pay the portion of tax that relates to this erroneous item.
Available while still married. Innocent spouse relief may be available even if you’re still married to, and living with, the spouse who should have reported additional tax. If you have assets of your own and want to protect them from collection by the IRS, these rules determine whether you can be held liable.
Erroneous item. Innocent spouse relief applies only to tax liability that arises from an “erroneous item.” That means you can’t use this provision for relief if you sign a correct return and your spouse simply fails to pay the amount shown on the tax return. If your return was correct and your spouse didn’t pay, see Equitable Relief.
Lack of knowledge. This requirement is one of the biggest problems in obtaining innocent spouse relief. You don’t get relief if you knew the return was incorrect ï¿½ or even if the court thinks you should have known. Some court decisions indicate that you can’t satisfy this condition unless you actually examine the return and ask questions about anything that doesn’t seem right ï¿½ an unrealistic expectation in many marriages. Sometimes the decisions seem to punish a spouse for being well educated, suggesting that anyone with a good academic background should have identified the problems in the return. This part of the rule is a major source of unfairness, but it remains part of the law.Applying for Relief The IRS won’t automatically grant you relief under this provision, even if you clearly meet all the requirements described above. You have to elect this treatment by filing a Request for Innocent Spouse Relief with the IRS.