Innocent Spouse Relief

Generally, “my spouse did it; I’m innocent!” is not a great excuse to use in everyday life for obvious reasons.

However, in cases where your spouse (or former spouse) is responsible for filing an erroneous tax return, a defense called “innocent spouse relief” can save you from the taxes, penalties, fees, and interest that are attributable to your spouse. Whether your spouse filed an incomplete tax return, mistakenly omitted items from the return, or knowingly committed tax fraud, innocent spouse relief protects a taxpayer from their spouse’s mistake or wrongdoing.

How to qualify for Innocent Spouse Relief

But innocent spouse relief isn’t available in all cases. To qualify for innocent spouse relief, you must meet the following requirements:

  • You filed a joint tax return that contained erroneous items, which caused less tax to be calculated than what is owed;
  • You didn’t have actual knowledge (or have reason to know) that the tax return was erroneous;
  • Considering all the circumstances, it would be unfair to penalize you; and
  • Neither you nor your spouse have transferred property to each other as part of a fraudulent scheme intended to defraud the IRS or another third-party (like a creditor).

Bear in mind that innocent spouse relief only applies to individual income or self-employment taxes. Also, you are still responsible for any taxes or penalties that do not qualify for relief.

Innocent Spouse Relief: Deep Dive

The IRS uses specific terminology to limit who can qualify for innocent spouse relief. Understanding the following terms as the IRS uses them is vital for qualifying for relief:

    • “Erroneous items:” unreported income or an incorrect deduction, credit, or basis
    • “Actual knowledge:” you knew that the tax return being filed was erroneous
    • “Reason to know:” a reasonable person in your same situation should have known the tax return contained errors
    • “Unfair:” when considering whether it is fair to hold you responsible for the erroneous tax return, the IRS considers all of the facts and circumstances surrounding your filing, including
      • Whether you directly or indirectly received a “significant benefit” (defined as “any benefit in excess of normal support”) from the erroneous tax return;
      • Whether you and your spouse are currently married, separated, or divorced; and
      • Other relevant factors

Because of the careful wording of the requirements, it’s important to contact an experienced tax attorney to ensure that you apply for relief and that your circumstances are presented in a way that fit within the parameters of the defense.

For additional information and a more in-depth explanation of innocent spouse relief see my Innocent Spouse E-Book or Innocent Spouse Webinar.

Get your consultation with our experienced legal team today

Don’t take chances with your tax returns: an erroneous tax return can wind up costing you big in fees, penalties, and interest if left uncorrected. If you think you may qualify for innocent spouse relief, schedule an initial consultation with the experienced legal team at the Law Offices of Robert V. Boeshaar online.

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