Who is Eligible to File for IRS Innocent Spouse Relief?

Who is Eligible to File for IRS Innocent Spouse Relief?

Figuring out if you qualify for innocent spouse relief from the IRS can be confusing. Let’s break it down into simple steps so you can see if you are eligible or not.

What is Innocent Spouse Relief?

When you file a joint tax return with your spouse, both of you are responsible for the tax owed. This means the IRS can collect the full amount due from either you or your spouse, even if your spouse earned most of the income. Innocent spouse relief is a way for the IRS to relieve you from owing tax if your spouse made mistakes or hid income on your joint return and you didn’t know about it.

Step 1: Did you file a joint return?

To qualify for innocent spouse relief, you must have filed a joint return for the tax year. If you filed separately, then you won’t qualify. The IRS looks at each return separately.

Step 2: Is there an underpayment of tax?

There must be an understatement of tax on the joint return that is due to your spouse’s errors or omissions. This means your spouse didn’t report all the income, claimed false deductions or credits, or miscalculated tax owed.

Step 3: Did you know about the underpayment?

You must show that when you signed the joint return, you didn’t know and had no reason to know there was an underpayment of tax. Some signs that may show you knew include:

• Your spouse had investment income you didn’t know about.
• Your spouse had a business you were not involved with.
• Your standard of living improved with no clear reason.

If you saw these signs, the IRS may think you should have known about the underpayment.

Step 4: Would it be unfair to hold you responsible?

The IRS looks at all the facts and circumstances to determine if it is unfair to hold you responsible for the tax owed. Some factors they consider are:

• Were you abused by your spouse or unable to challenge them?
• Did you benefit at all from the unpaid tax?
• Did your spouse hide income or assets from you?

If the underpayment is due to your spouse and you didn’t know or benefit at all, the IRS will likely find it unfair to make you pay.

Other Spousal Relief Options

If you don’t qualify for innocent spouse relief, the IRS offers other options that may apply:

• Separation of liability – For joint returns with understated tax due to your spouse’s errors.
• Equitable relief – Available when it would be unfair to hold you liable for tax that should be paid only by your spouse.
• Injured spouse relief – Allocates your share of a joint refund to you that would otherwise go to your spouse’s debts.

See IRS Publication 971 for more details on spousal relief options.

We hope this overview helps you understand if you may qualify for innocent spouse relief! Let us know if you have any other tax questions.