Innocent Spouse Tax Relief: How To File Innocent Spouse Tax Form?
Curious about how to get innocent spouse tax relief?
Read along to learn how to apply for Innocent Spouse Tax Relief, so you can understand exactly what steps to take before it is too late.
This relief is more beneficial to claim than you might think. Why? Because it’s designed to clear your name and alleviate unexpected tax liabilities swiftly—often within a few months.
What is an Innocent Spouse Relief?
Innocent Spouse Relief can protect you from tax debts if you don’t know about your spouse’s mistakes on a joint return. If you weren’t aware of the errors and didn’t benefit from them, you might not be responsible for the extra taxes and penalties.
Who is Eligible for Innocent Spouse Relief?
To be eligible for innocent spouse tax relief, these criteria are to be met:
- Joint Return was Filed: You filed a joint return with your spouse, and they made an error that led to a tax understatement. Deductions, credits, and property basis count as “erroneous items” if they are incorrectly reported on the joint return.
- No Prior Knowledge: You had no idea about the error before the time when the tax bill was sent to you.
- Decision of the IRS: The IRS must agree that it’s fair to relieve you of this tax burden.
- Apply on Time: You need to apply for relief within two years of the IRS starting collection effort.
Three Types of Relief for Spouses Who Filed Joint Returns
Innocent Spouse Relief
Separation of Liability Relief
This type of relief is applicable when:
- Change in Marital Status: You are divorced, legally separated from the spouse with whom you filed the joint return or widowed.
- Living Arrangements: You have not lived in the same household as your spouse at any time during the 12 months preceding your request for relief.
Equitable Relief
To qualify for Equitable Relief, you must persuade the IRS that:
- Fairness: Holding you responsible for the tax debt would be inequitable, given the circumstances.
- IRS Criteria: The IRS considers factors such as marital status, economic hardship, and the extent of your knowledge about the erroneous items on the return.
Each type of relief has specific requirements and considerations, so it is crucial to evaluate your eligibility carefully and seek professional guidance if needed.
Also Read: Expert IRS Debt Forgiveness Services – Regain Financial Freedom
What is Innocent Spouse Relief Form 8857?
Innocent Spouse Relief Form 8857 is an essential tool for taxpayers seeking relief from joint tax liabilities incurred as a result of their spouse’s or former spouse’s actions.
Filing this form with the Internal Revenue Service (IRS) allows individuals to request relief from tax debts, interest, and penalties that arise from unreported income, erroneous deductions, or improper credits on a joint tax return.
You generally must file an Innocent spouse relief form within the 10-year period during which the IRS is legally allowed to collect the tax. This period begins on the date the tax liability was assessed.
How to File Innocent Spouse Tax Form 8557?
When facing tax liabilities from a joint return due to errors attributable to your spouse, understanding the process for seeking relief is crucial.
Here are the steps for filing for each type of tax relief: Innocent Spouse Relief, Separation of Liability Relief, and Equitable Relief.
Filing for Innocent Spouse Relief
- Determine Eligibility: Ensure that you meet the requirements for Innocent Spouse Relief, such as lacking knowledge of the errors and showing that it would be unfair to hold you liable.
- Gather Documentation: Collect all necessary documentation, including the joint tax return in question and any evidence supporting your claim that you were unaware of the errors.
- Complete Form 8857: Fill out IRS Form 8857, Request for Innocent Spouse Relief.
- Part I: Provide personal information, including your name, Social Security Number (SSN), and current address.
- Part II: Indicate the type of relief you are requesting.
- Part III: Describe the erroneous items and why you believe you qualify for relief. Provide as much detail as possible, explaining your lack of knowledge about the errors and why it would be unfair to hold you responsible.
- Submit the Form: Send the completed Form 8857 to the IRS at the address specified on the form. You can also attach any supporting documentation that strengthens your case.
- IRS Review: After submission, the IRS will review your request and may contact you for additional information. Be prepared to respond promptly to any inquiries.
- Decision: The IRS will issue a decision on your request, either granting or denying relief. If granted, you will not be held liable for the taxes, interest, or penalties related to your spouse’s errors.
Filing for Separation of Liability Relief
- Verify Eligibility: Confirm that you meet the criteria for Separation of Liability Relief, such as being divorced, legally separated, widowed, or living apart from your spouse for at least 12 months.
- Complete Form 8857: Use the same IRS Form 8857, Request for Innocent Spouse Relief, to request Separation of Liability Relief. Indicate that you are seeking this specific type of relief.
- Provide Supporting Information: Attach documentation that supports your eligibility, such as divorce decrees, separation agreements, or proof of separate living arrangements.
- Submit the Form: Mail the completed form and documentation to the IRS. Ensure that all information is accurate and complete to avoid delays.
- Await IRS Response: The IRS will review your request and notify you of its decision. If approved, your tax liability will be adjusted to reflect only your share of the tax owed.
Filing for Equitable Relief
- Assess Eligibility: Determine if Equitable Relief is appropriate for your situation, particularly if you do not qualify for the other two types of relief but believe it is unfair to hold you liable.
- Document Your Circumstances: Gather evidence that supports your claim, including any factors demonstrating why it would be inequitable to hold you responsible for the tax debt.
- Complete Form 8857: Fill out IRS Form 8857, Request for Innocent Spouse Relief, indicating that you are seeking Equitable Relief. Provide a detailed explanation of your circumstances.
- Include Supporting Evidence: Attach any relevant documentation, such as proof of economic hardship, lack of knowledge about the errors, or any other pertinent information.
- Submit the Form: Send the completed form and supporting documents to the IRS. Ensure clarity and thoroughness in your explanation and evidence.
- IRS Evaluation: The IRS will evaluate your request, considering all facts and circumstances. They may contact you for additional information or clarification.
- Outcome Notification: You will receive a notification of the IRS’s decision. You may be relieved of some or all of the tax liability if granted.
Common Mistakes to Avoid When Filing Form 8857
1. Inaccurate Information: Providing incorrect or incomplete information on Form 8857 is one of the most common mistakes. Double-check all details, including financial figures, dates, and explanations, to ensure accuracy. Inaccuracies can lead to delays or even a denial of your request for relief.
2. Missing Documentation: Please include all necessary documentation to ensure your case is valid. Ensure you submit copies of all relevant tax returns, correspondence with the IRS, and any other documents that support your claim of innocence and lack of knowledge about the errors on the joint return.
3. Ignoring Deadlines: The IRS has strict deadlines for filing Form 8857, typically within two years of the IRS initiating collection activities. Missing this deadline can result in losing your eligibility for Innocent Spouse Relief, so filing promptly is important.
4. Not Explaining Your Lack of Knowledge: The IRS needs to understand why you were unaware of the errors on the joint return. Failing to clearly explain how you were kept in the dark about the tax issues can hurt your chances of receiving relief.
6. Failing to Provide a Strong Narrative: When explaining your situation, it’s essential to provide a clear and compelling narrative that outlines your lack of knowledge and involvement in tax issues. Simply stating that you didn’t know might not be enough. The IRS needs a detailed explanation of your circumstances and why it would be unfair to hold you liable.
7. Overlooking Eligibility Requirements: Before filing, ensure you meet all the eligibility criteria for Innocent Spouse Relief. Filing without meeting these requirements can waste time and resources and may lead to a quick denial of your application.
8. Incorrectly Estimating Benefits from the Error: If you benefited in any way from the error, such as receiving a portion of the unreported income, failing to disclose this can be a critical mistake.
New Rules for Innocent Spouse Relief (Including Separation Of Liability And Equitable Relief)
“Joint and several liability” means that each spouse is legally responsible for the entire tax debt, regardless of who earned the income or claimed deductions. This responsibility remains even if a divorce decree assigns tax responsibility to one former spouse.
Fortunately, in some cases, a spouse can qualify for Innocent Spouse Relief, which provides a way to seek relief from this joint liability.
Why Professional Help is Essential for Innocent Spouse Relief?
IRS consultants like Michael Sullivan know what you don’t know about the IRS. Thus, you are always on the safe side.
- Strategic Case Presentation:
Experts are great at telling a story that is compelling and true to your circumstances. By highlighting key facts and evidence, they ensure that crucial details are not overlooked—something that might happen if you handle the case on your own.This level of expertise can also extend to cases involving IRS debt forgiveness programs, where a strong presentation can make a significant difference. - Anticipating IRS Scrutiny:
Experts have an in-depth understanding of how the IRS reviews cases. They can anticipate potential challenges and prepare thorough responses, ensuring your case stands up to rigorous examination. - Access to Insider Expertise:
Professionals with former IRS experience provide invaluable insights into the inner workings of the agency. This insider knowledge can be useful in securing relief through innocent spouse claims, IRS debt forgiveness programs, or other avenues, giving you an edge that others may not have. - Comprehensive Relief Options:
Beyond Innocent Spouse Relief, professionals can identify additional IRS relief programs you might qualify for, maximizing your overall tax savings. Whether it’s through IRS audit reconsideration or other options, they ensure you explore every possible solution. - Timely and Accurate Filings:
Missing deadlines or submitting incorrect information can result in costly delays or denials. By hiring a professional, you ensure that your application is submitted on time and free of errors.
Wrapping Up
A common misunderstanding is that you must pay the tax owed before applying for relief. This is not true. You can apply for Innocent Spouse Relief even if you haven’t paid the taxes.
Contrary to popular belief, you don’t have to settle your tax debt before seeking relief. You can apply for Innocent Spouse Relief even if you haven’t paid the taxes owed. The IRS will review your application to determine liability, so you can start the relief process now without worrying about upfront payments.
Get a free consultation and take the first step towards resolving your tax issues today!