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Key Take Away for Innocent Spouse Relief and Injured Spouse Allocation

For the best results, it's wise to use a tax consultant when applying for innocent spouse relief or injured spouse allocation. This specialist can also assist you if the IRS rejects your claim. They can help prepare the evidence for you, which will be reviewed in the U.S. Tax Court should you decide to appeal.

Fact Sheet: IRS Innocent Spouse and Injured Spouse Allocation

Under federal law, if a joint income tax return signed by both husband and wife is filed, both spouses are 100 percent responsible for taxes owed. However, there is a narrow exception to this rule known as innocent spouse relief. This exception allows the IRS to release a spouse from direct financial liability for unpaid taxes. An injured spouse allocation can be given when you file a joint return and your money is applied to your spouse's past tax debts or other debts like child support. This means that you may be able to get your share of that money back.

Overview of IRS Innocent Spouse Relief and Injured Spouse Allocation

The IRS realizes that are some situations in which a spouse cannot be held responsible for tax mistakes attributed to the other spouse. At the same time, innocent spouse relief is tough to obtain and granted on a case-by-case basis. No one factor determines whether or not innocent spouse relief is granted. The IRS will conduct an evaluation of the spouse's relationship status, mental disabilities, education and level of involvement in the household finances. Being divorced or being in the process of a divorce can work in favor of the wronged spouse. Simply stating that your spouse lied to you is not sufficient to obtain innocent spouse relief. If you had suspect or reason to know about the inaccurate tax return, you will not qualify for innocent spouse relief. To apply for innocent spouse relief, IRS Form 8857 must be filed. To apply for an injured spouse allocation, IRS Form 8379 must be filed.

The IRS Pre-Qualifier for Innocent Spouse Relief

You must meet the following criteria to qualify for innocent spouse relief:

  • The joint return has an understatement of tax deficiency that is solely attributed to your spouse's erroneous item. Erroneous items include omitted income, incorrect deductions, incorrect property basis and incorrect tax credits.
  • You establish that fact that you did not know or have reason to know that there was an understatement of tax.
  • Taking into account the circumstance and all of the facts, it would be unfair to hold you liable for the incorrect joint tax return.

To qualify for injured spouse allocation you must:

  • Not be personally required to pay the past-due debt.
  • During the year in question, you had earned income reported on Form 1040, made estimated tax payments or had income taxes withheld from your pay.

A Closer Look at Innocent Spouse Relief and Injured Spouse Allocation

If you do not meet the requirements for innocent spouse relief, you may still qualify for another type of tax relief for innocent spouses. The IRS will determine which one you qualify for. Under IRS guidelines issues in 2012 for innocent spouse relief, there is no longer a time limit for claims. If you didn't request relief for previous year due to the old two-year limit, you can now make a request. Plus, if a previous claim was rejected due to the time limit, you can now make a new request. For injured spouse allocation, the IRS uses each state's rules to determine the amount.

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