Is there truly such a thing in any marriage as an “innocent” spouse? Well, according to the IRS, it doesn’t matter who truly may be at fault for the situation, because it is quite possible for one spouse to be innocent. Especially when it comes to being delinquent on taxes. If one happens to be behind on his or her taxes, even the IRS offers options. However, they don’t willingly just give away free passes because one asks for them.
Where Did This Come From
The Innocent Spouse Relief Rule came into effect back in 1998 as part of the tax reforms put into place that year. The idea was to provide some method of seeking relief from the IRS and U.S. Tax Court for those individuals who believe they have been duped by their spouse regarding payment of taxes.
In most cases, the concept of being asked to be identified as an “innocent” spouse comes up when a couple was married at the time the taxes were filed but then divorces later. But, it is possible to file as an innocent spouse, even if one is still married. However, it is an individual’s responsibility to speak up, and contact the IRS if the taxpayer believes the taxes he or she is being asked to pay belong to a current or former spouse.
How Do You Get Your Claim Started?
The process begins with filing an IRS Form 8857 Request for Innocent Spouse Relief. This form is used to help the taxpayer file a request for a tax liability that is completely separate from his or her current or former spouse. Sounds easy enough, right? Not so fast. It is up to the innocent spouse to prove she had no knowledge that the joint return contained errors. At the same time, the innocent spouse must be able to prove that when she signed the return, she had no idea their spouse listed an understated amount of taxes due.
This is only the beginning. The innocent spouse must also convince the IRS that when looking at the facts surrounding their situation, it would be “unfair” for her to be held liable. In addition, the taxpayers cannot have transferred any property to one another in an attempt to defraud the IRS or any other third party out of monies owed.
What Is Considered Erroneous Information?
According to the IRS, there are only two errors they consider to be eligible under for consideration under the Innocent Spouse Relief Rule. These are:
Income Not Reported
This one is self-explanatory but includes any income either spouse has received, but has not been reported to the IRS. For example, the current or former spouse is a mechanic and works on cars in his garage, but fails to report this income the IRS.
This covers listing any deductions, credits, or property basis claimed by a current or former spouse either accidentally or on purpose in which the IRS is not paid the correct amount of taxes. Examples of this include,
Claiming an expense that never occurred or was never in fact paid for. For example, a spouse who claims $10,000 on Schedule C for advertising expenses he never actually paid for.
Claiming something that isn’t eligible for deduction as an expense. This might include trying to claim business fines as fees. Payments made as state fines are not considered an eligible expense.
However, the innocent spouse must also be able to prove she had no knowledge of the fact her spouse was engaged in any activity that would result in the IRS not being paid the correct amount. The IRS will take a number of facts into account, as such it is the innocent spouse’s responsibility to provide IRS with as much information as possible to help prove her reason for filing for Innocent Spouse Relief.