Spouse’s Tax Debt- Innocent Spouse Relief
Posted on 04/14/2021at8:17 pm
The IRS says I owe money because of my spouse’s tax debt. Is there anything I can do? You may not have to pay your spouse’s tax debt if you qualify as an “innocent spouse.”
What is "Innocent Spouse Relief"?
Innocent spouse relief means you do not have to pay a joint tax debt.
When you sign a joint tax return, you and your spouse both become responsible for any tax debt resulting from the return. This means you could be responsible for paying the whole tax debt even if you didn’t earn any money that year or the debt is entirely your spouse’s fault.
If you qualify for Innocent Spouse Relief, you may be found not responsible for all or part of that tax debt.
Do you qualify as an innocent spouse?
If you answer yes to ALL the following questions, you may want to apply for Innocent Spouse Relief:
- Did you file a joint income tax return with your husband or wife? AND
- Do you owe back taxes on money your husband or wife earned? AND
- Does it seem unfair to make you pay the taxes?
There are three ways to qualify for Innocent Spouse Relief: 1) Separation of Liability; (2) Traditional Innocent Spouse Relief, and (3) Equitable Relief.
1. First Way to Qualify: Separation of Liability
You may request that the IRS separate your tax liability from your spouse’s liability even though you filed a joint return. The tax debt must result from an understatement of income or overstatement of deductions for a separation of liability.
You may qualify if:
- You are divorced; OR
- You are legally separated; OR
- You have lived apart at all times during the 12 months prior to filing for Innocent Spouse Relief.
You may not qualify if:
- You already paid the tax debt; OR
- You knew the tax return was wrong at the time you signed it, OR
- The tax debt was listed on the return.
If your request for innocent spouse relief is denied and you are a low income person in West Virginia, apply for help from Legal Aid of West Virginia.
2. Second Way to Qualify: Traditional Innocent Spouse Relief
You may qualify if:
- You filed a joint income tax return during the year of the tax debt; AND
- There was an understatement of tax on the tax return due to unreported income, overstated deductions, or an erroneous item; AND
- You did not know that there was an understatement of tax when you signed the return; AND
- It would be unfair to hold you liable for the tax.
If you qualify, you may be able to ask for a refund of taxes paid and may not have to pay the debt. If you knew about the understatement of tax, but not the full extent of the understatement, you may qualify for partial innocent spouse relief.
3. Third Way to Qualify: Equitable Relief
You may qualify for Equitable Relief if, under all the facts and circumstances, it would be unfair to hold you liable for the tax debt AND relief isn’t available under the rules of either Traditional Innocent Spouse Relief or Separation of Liability. You can request Equitable Relief if the tax debt is from an understatement of income or underpayment of taxes. You may do so even if the tax debt was listed on the joint return.
The IRS may decide that it is unfair to hold you liable for tax debt if:
- You were abused by your spouse;
- You are unable to pay your bills;
- English is your second language;
- You are divorced, legally separated, or were physically separated for 12 months;
- Your spouse has a higher education level than you;
- Your divorce decree requires your spouse to pay the tax debt; OR
- The liability is due solely to your spouse’s income.
How do I request tax debt relief?
Fill out IRS Form 8857. Here is a link to the form. If you need more room to explain your answers, attach a statement and copies of any documents that support your claim. Include your name and Social Security number on any attachments.
One of the questions on the form asks if you were a victim of spousal abuse or domestic violence during the relevant tax years.
The IRS must inform your spouse or former spouse that you have filed for relief. But the IRS will not give your spouse or former spouse any of your personal information. However, should your case eventually be appealed to Tax Court, your spouse or former spouse may see your personal information.
If you are requesting Innocent Spouse Relief for more than one year, you should file one form but attach a separate statement for each year that explains why you qualify.
Do not file IRS Form 8857 with your income tax return.
You should file as soon as your return is audited, or the IRS sends you a notice, or the IRS withholds your tax refund to pay the debt.
What is the difference between an "Innocent Spouse" and an "Injured Spouse"?
Do not confuse “innocent spouse” relief with “injured spouse” relief. An “injured spouse” is not the same as an “innocent spouse.”
Injured spouse relief may be granted when all or part of your share of a tax refund was, or will be, used to pay certain types of your spouse’s debts. These types of debt include your spouse’s unpaid child support, spousal support, student loans, or other non-marital tax debt.
When a married couple files a joint tax return, normally the entire refund can be used to pay the debt of one spouse. However, if you qualify for “injured spouse” relief, then you may not have to be responsible for your spouse’s debt. Instead you may receive your share of the tax refund.