Sometimes, you just end up falling for someone who only looks out for themselves; without any regard to what is right or wrong or whether their actions could adversely affect you. Your spouse ends up doing something shady, or just makes an error on the tax return. Since you are their spouse, you end up having to face the consequences of their bad behavior on your tax returns.
Or do you?
Maybe you had nothing to do with what they did, or hid everything not only from the IRS, but from you as well. Should you have to pay for their misguided behavior, or their stupidity?
The IRS has a few options to help you in this situation. Let’s look at your options.
The first option is to apply for innocent spouse relief. You can get this if your spouse didn’t report income or didn’t report it correctly, or claimed some deductions or credits they shouldn’t have. You will need to be able to prove that you did not know, or have reason to know about what your spouse did, and it not be fair to hold you responsible for what your spouse did.
Another option you have is something called separation of liability relief. If you owed additional taxes due to something your former significant other did, this option will allocate the amount of taxes owed between the spouses, so that you only owe the amount for which you are responsible. To qualify, you will need to be divorced or separated from your spouse, or be widowed, and not be a member of the same household. You will also need to be able to prove that when you signed the return you had no knowledge of the item your spouse claimed.
You could also get something called Equitable Relief. You could get this if you do not qualify for Innocent Spouse Relief or Separation of Liability Relief. While the other options deal with items not reported on a return or not correctly reported on a return, this option is available if the return was correct, but taxes were not paid.
If you qualify any of these options, you will need file form 8857, Request for Innocent Spouse Relief.
There is a time limit for applying for these relief options. You have two years after the IRS contacts you about the problem to apply for innocent spouse relief or separation of liability. For equitable relief, you must request relief within the time the IRS can collect the tax from you, which is usually about three years.
In addition, when you make a request to the IRS for any of these types of relief, the IRS is required to notify your spouse of your request. Your spouse may then decide to present information about your claim. So if you have had a bad relationship and bitter divorce, contact your attorney to let them know what you are doing before filing for any type of relief.
Have questions about any of these things? The author would love to chat with you and provide help if necessary. You can email him at firstname.lastname@example.org.
Chris Peden is a CPA whose mission is to help people organize their financial data in a way that helps them make good decisions about their personal lives and growing their businesses. His website is www.my-online-cpa.com.