Joint Tax Returns: Do You Need Innocent Spouse Relief?

When you and your spouse file a joint tax return, the IRS deems both of you jointly liable for any tax due. If, however, you or your spouse believes that one party should not be liable for the tax due, you can apply for Innocent Spouse Relief. Innocent Spouse Relief can relieve one from the responsibility of paying tax, interest, and/or penalties if you or your spouse improperly reported or omitted items on your joint tax return. Keep in mind, however, that only individual income or self-employment taxes are eligible for Innocent Spouse Relief.

Do You Qualify for Innocent Spouse Relief?

In order to qualify for Innocent Spouse Relief, all 4 requirements below must be met and shown in your application:

  1. You filed a joint tax return with your spouse that has an understatement of tax due because of erroneous items reported by your spouse.
    • Erroneous items are either unreported income (any income that your spouse received that was not reported), or incorrect deductions, credit, or basis (any improper deduction claimed by your spouse).
  1. You establish that at the time you signed the joint tax return you did not know and had no reason to know, that there was an understatement of tax due.
    • Please Note: If you actually knew of the understatement on the tax return, or if a reasonable person in similar circumstances would have known of the understatement, you would still remain liable and would not qualify for Innocent Spouse Relief.
  1. Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax due.
    • Some factors the IRS will consider are:
      • Whether you received any benefit in excess of normal support, either directly or indirectly, from the understatement of tax due.
      • Whether your spouse deserted you.
      • Whether you and your spouse have been divorced or separated.
      • Whether you received a benefit on the return from the understatement.
  1. You and your spouse have not transferred property to one another as a part of a fraudulent scheme.
    • A fraudulent scheme is a scheme to defraud the IRS or another third party (e.g. creditor, ex-spouse, or business partner).

Migration Resource Center Taxpayer Legal Services

The Migration Resource Center staff has a team of tax consultants, tax attorneys, enrolled agents, and CPAs. We can assist you with reducing tax liabilities, eliminating tax disputes, negotiating IRS payments, and providing ethical tax representation and tax resolutions.

Please contact us at (646) 827-2959 or use our webform to schedule a free tax consultation.

By: Jacob Joseph, Law Clerk August 30, 2020