When to Apply For Innocent Spouse Relief

Being married and filing a joint tax return is one of many benefits of being married. Filing a joint tax return allows for larger deductions and an overall less payment of tax. When filing a joint tax return, the IRS holds the individuals jointly and individually liable for the tax liability created. Both individuals are still liable for the tax liability created even if they divorce at a later date and still have an outstanding tax liability from the years they were married and filed a joint return together. This is where problems tend to arise very frequently for people who file joint returns. The IRS still holds individuals jointly liable for the tax amount even if the divorce ruling says that one individual is responsible for paying the entire amount. This is where innocent spouse relief comes in.

Innocent spouse relief is a form of tax relief offered by the IRS and most states. This type of relief may relieve an individual from taxes owed, interest, and penalties arising from the filing of a joint return. The IRS has very specific requirements to meet in order to qualify for this type of relief. In the past this type of relief was extremely rare to qualify for, however, in the past few years many changes have been made to loosen the restrictions on this type of relief. Since the original creation of this type of relief the IRS has created two additional ways of qualifying. Now, there are three ways to qualify for innocent spouse relief. The three relief mechanisms are innocent spouse relief (can be seen as "classic" type of relief), relief by separation of liability, and equitable relief.

Innocent spouse relief has many specific requirements and when you go the IRS publication 971, it will detail each requirement in details that are tedious and repetitive to read. Each type of relief has their separate set of requirements, some repetitive, some original. Here is the most basic list of requirements you need ranked in order to qualify for this type of relief.

1) Did you file a joint return?

2) When filing, you had an understatement or and underpayment of tax due to erroneous items of your current or former spouse (if underpayment see #6 and on)

3) At the time you signed the joint return; did you know of any erroneous items?

4) You are able to prove that it would be unfair for the IRS to hold you liable for the tax amount owed?

5) If you had an understatement of tax, did you not pay the tax amount owed? Can prove it would be unfair to hold you liable for the underpayment?

6) Can you prove you did not transfer property or do anything as a fraudulent scheme that would prevent you from paying the entire amount of tax owed?

If you can answer yes to all those questions, chances are you will most likely qualify for innocent spouse relief, especially if everything is filled out with the specific qualifications in mind.