Innocent Spouse Relief
When you file joint tax returns with your spouse, you’re both typically responsible for paying the full amount of tax reported. This means the IRS can collect from either spouse—even after divorce—and isn’t obligated to follow payment arrangements outlined in your divorce decree.
However, there’s good news if you find yourself facing tax debt that wasn’t your doing. In certain circumstances, you may qualify for relief from joint tax liability through one of four options: 1) Innocent Spouse Relief, 2) Injured Spouse Relief, 3) Separation of Liability Relief, or 4) Equitable Relief.
If you believe you might qualify for any of these relief options—or if your spouse has filed an innocent spouse relief claim—contacting an experienced innocent spouse relief lawyer at Ledingham Law today could be your first step toward financial protection.
What is Innocent Spouse Relief?
You might be wondering, “what is innocent spouse relief?” Simply put, IRS innocent spouse relief provides protection for taxpayers from tax debt resulting from their current or former partner’s misreporting or wrongdoing on joint returns. This vital form of relief is designed specifically for those who had no knowledge of tax return inaccuracies and played no role in either the oversight or intentional deception.
Think of innocent spouse relief as a financial safety net for individuals who, despite signing a joint return, weren’t responsible for the tax errors and shouldn’t bear the burden of their partner’s financial mistakes or dishonesty.
How to File for Innocent Spouse Relief
The IRS maintains strict criteria when evaluating innocent spouse relief applications. Working with an experienced innocent spouse relief lawyer can significantly improve your chances of success as you navigate these requirements:
First, you must demonstrate that you were genuinely unaware of the inaccuracies that led to unreported income, incorrect deductions or credits, or improperly valued assets. This is crucial since IRS innocent spouse relief is specifically designed to protect those who didn’t knowingly participate in or consent to filing misleading tax returns.
Second, you’ll need to establish that relieving you from tax liability is fair given the disconnect between your innocence and the financial burden you’re facing.
When reviewing your case, the IRS examines numerous factors, including:
- The nature of the erroneous tax item
- Your and your spouse’s (or former spouse’s) financial situation
- Both parties’ educational backgrounds
- The extent of your participation in preparing the return
- Whether a reasonable person would have questioned the tax return’s accuracy
- The presence of any domestic abuse in the relationship
It’s essential to present your case clearly and concisely, demonstrating through facts that you weren’t the spouse responsible for understating tax obligations. An experienced innocent spouse relief lawyer can help you gather and present this evidence effectively.
Another critical eligibility requirement involves timing—you must file for innocent spouse relief within the timeframe allowed by the IRS, highlighting why prompt action is so important in these situations.
The IRS conducts thorough examinations of each application, often requesting additional documentation or evidence to support your claim of innocence. This rigorous vetting ensures that innocent spouse relief is granted only to those who truly meet the established criteria.
What is Injured Spouse Relief?
Injured Spouse Relief comes into play when the IRS withholds a joint refund to apply it toward your spouse’s outstanding debts, such as federal tax, state income tax, child or spousal support, or federal non-tax debts like student loans. By applying for this relief, you assert your right to your portion of the refund, ensuring your contribution to joint tax payments is recognized and protected. This protection is crucial for spouses who might otherwise unfairly lose their refund share due to their partner’s debts.
To initiate Injured Spouse Relief, you’ll need to complete Form 8379 (Injured Spouse Allocation) accurately. Attaching this form to your joint tax return is a strategic move to protect your rightful share of any refund. The IRS’s evaluation of your submission plays a critical role in determining how your refund will be allocated, ensuring fairness and acknowledging your individual financial contribution.
What is Separation of Liability Relief?
Separation of liability relief means you’re generally only responsible for the understated tax that’s attributable to you. To request this relief, you must have filed a joint tax return, no longer share a household with your spouse, have no involvement in a fraudulent scheme with your ex-spouse, and had no actual knowledge of any erroneous items causing the tax deficiency. It’s important to understand that even if you had knowledge of just a portion of an erroneous item, the IRS won’t grant relief for that specific portion.
What Is Equitable Relief?
If you don’t qualify for innocent spouse relief or separation of liability relief, you may still find protection through equitable relief from tax responsibilities, interest, and penalties. Equitable relief has several threshold requirements:
- You don’t qualify for innocent spouse relief or separation of liability relief
- You filed a joint return for the tax year(s) in question
- You filed your relief claim within the required timeframe
- You didn’t participate in a fraudulent scheme with your spouse (or former spouse)
- You didn’t knowingly participate in filing a fraudulent joint return
- The income tax liability is attributable (either fully or partially) to your spouse
Navigating these complex relief options can be challenging, which is why consulting with a knowledgeable innocent spouse relief lawyer can make all the difference in protecting your financial future from tax liabilities that shouldn’t be your responsibility.
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Being selected for an audit is arguably one of the worst things that could happen to a small business owner, or at least that’s how I felt.
It felt a lot less stressful when I hired Jess to communicate with the IRS on my behalf. Her extensive knowledge of tax law was evident when she would educate not just me but also the RA on the proper law.
She went the extra mile every day – with driving to me, essentially holding my hand through an interview, and making sure all responses to the RA were effective.
If you get audited – I strongly recommend having her by your side.
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As a small business owner, I had an enormous amount of questions. I needed to know how to book keep, claim deductions and credits, navigate selling online, providing services in different jurisdictions, and filing quarterly taxes.
A small business requires an enormous attention to detail and Jessica helped me be meticulous in strategizing my tax landscape and know the necessary laws and regulations.
I highly recommend her to anyone with tax questions.
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The analysis of whether you are entitled to relief from taxes attributable to your spouse or former spouse is extremely complicated. If you owe a joint tax liability and you think you might qualify for relief, contact Ledingham Law today for an evaluation of your case.
