If your ex-spouse understated their taxes, you may qualify for innocent spouse relief. Under the IRS definition, an innocent spouse has never intentionally understated their tax liability. In other words, he or she didn’t know that their ex-spouse owed money. Once you file Form 8857, the IRS will calculate your tax debt. In most cases, you’ll be entitled to all of the understated tax, including interest and penalties. In most cases, you’ll have to prove that you were unaware of your spouse’s understatement of tax.
Fortunately, there are several options for innocent spouse relief. First, if your spouse filed a joint return with an understated amount of tax, you may be able to qualify. As long as you didn’t know about the error and didn’t have any reason to know about it, you may be eligible for innocent spouse relief. In some cases, you can even apply for innocent spouse relief if your spouse engaged in fraudulent transfer of property.
In the past, the IRS has been very strict with the types of relief available to innocent spouses. Generally, innocent spouse relief is only available for unreported income and that you must meet strict requirements. In the new IRS code, taxpayers won’t have to specify which type of relief they qualify for. If they do qualify for another type of relief, they’ll need to file separately. So, how can you apply for innocent spouse relief?
In most cases, innocent spouse relief will not be granted if the IRS can prove that the tax burden was understated. This is because it would be unfair to hold the innocent spouse liable for an understated tax if they didn’t know about it. This relief is generally not granted on the basis of the application alone, and many applications are rejected without even a chance of being approved. When applying for innocent spouse relief, you’ll need to know that the IRS receives more than 50,000 applications per year. Just about half of these applications will be granted, so the chances of obtaining it are slim.
Generally, you can apply for innocent spouse relief if your spouse didn’t make any mistakes on their tax returns. It’s important to note that the IRS does not have the resources to review every joint collection account to determine who’s the innocent spouse. Therefore, you should hire a tax lawyer to help you. The IRS must notify your spouse of your intent to file for innocent spouse relief and allow your spouse to participate in the process.
Innocent spouse relief must be requested within two years of the IRS’ first attempt to collect tax. However, if you have been unable to manage your financial affairs during that time, your application may be considered timely if you meet other criteria. You’ll need to show that you paid the tax with your own money – a bank statement or a canceled check will do. If you paid with individual refunds, the IRS does not require you to provide proof of your involvement in the erroneous item.
The deciding factor in determining whether you qualify for innocent spouse relief is the type of liability you incurred in your marriage. The determining factor is whether your spouse filed joint returns or not. If he or she did, the other spouse filed a joint return for the same tax year. If your spouse filed a joint return, that return contained a substantial understatement of tax that was due to grossly erroneous items on the other spouse’s return. In such cases, the innocent spouse is not liable.
Innocent spouse relief can be obtained in many ways. The most common way to raise the issue is by filing a Form 8857. Form 8857 is designed to gather information about the case and the factors that may help your spouse obtain relief. In part VI, the requesting spouse can tell their story. A good narrative will weave in all the facts that may make it possible to qualify for innocent spouse relief. So, if your spouse is unsure about the status of his or her marriage, don’t worry.
If you are not eligible for innocent spouse relief, you can still receive equitable relief. But you must meet other requirements for this relief, including establishing unfairness and meeting other requirements outlined in Publication 971. You may also qualify for equitable relief if your ex-spouse abused you, manipulated your finances, or used unfair means to get the money. Regardless, you can appeal the decision to the IRS. The IRS may change its mind or grant innocent spouse relief.