Understanding Innocent Spouse Relief

Did you know that if you are married and file a joint tax return, you are both equally responsible for the information and the payment of appropriate taxes?  However, a spouse can be relieved of all IRS tax, interest and penalties if certain criterias are met. This is known as Innocent Spouse Relief.  There are three types of relief available for people who are in this situation and can qualify: innocent spouse relief, relief by separation of liability, and equitable relief.

The following conditions will determine if you qualify for innocent spouse relief:

  1. You filed a joint return.
  2. There is an under-reported tax on the return that is due to “erroneous items” of your spouse or former spouse.
  3. You can show that when you signed the joint return you did not know, and had no reason to know that the under-reported tax existed (or the extent to which the understated tax existed).
  4. Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated tax.

If you have underreported income or incorrect deduction, credit or basis, this is what the IRS considers “erroneous items.”If the amount the IRS is trying to collect from you is from an original return balance due (an underpaid tax), then innocent spouse relief does not apply to you. It is very important to work with professionals who understand the laws. OIC Tax Services is The Trusted Tax Relief Company. We work hard to get you the results that you deserve.

Under the Relief by Separation of Liability, you allocate (separate) the understatement of tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). The understatement of tax allocated to you is generally the amount for which you are responsible.  Relief by separation of liability only applies to understatements of your tax. Refunds are not allowed.

To qualify for relief by separation of liability, you must be no longer married to, or are legally separated from your spouse, or have not been a member of the same household as your spouse during the 12-month period ending on the date you file for relief. This type of relief is available only for an understated tax (not an original return balance).

Unlike innocent spouse relief or separation of liability, you can get equitable relief from an understatement of tax. An underpayment of tax is an amount of tax you properly reported on your return but you have not paid. We know that this can be overwhelming and a little confusing, but our tax professionals have years of experience handling innocent spouse relief.

For a free confidential consultation about this matter, please give us a call at 916.830.7555 or fill out the confidential questionnaire  and one of our tax professionals will contact you.