Tax Help Hawaii

IRS Innocent Spouse Relief

You May Not Have to Pay Tax Debt Caused by Your Spouse or Former Spouse

When you file a joint tax return, both spouses are generally responsible for the tax, interest and penalties associated with that return—even after divorce.

But there are circumstances in which the IRS may relieve one spouse from responsibility for some or all of a joint tax liability.

Tax Help Hawaii can review your circumstances, help you understand the available forms of spouse relief and assist with preparing an IRS Innocent Spouse Relief request when appropriate.

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Call Tax Help Hawaii: 310-966-0266

What Is IRS Innocent Spouse Relief?

Innocent Spouse Relief may provide protection when a joint tax return understated the tax because of errors attributable to your spouse or former spouse and you didn’t know—or have reason to know—about those errors when you signed the return.

Examples can include a spouse’s:
  • Unreported income
  • Incorrect deductions
  • Improper credits
  • Incorrectly reported assets or basis
  • Other erroneous items on a joint return

The IRS considers the individual facts and circumstances before determining whether relief should be granted.

Three Important Types of Spouse Relief

There isn’t just one type of IRS spouse relief. When you submit Form 8857, Request for Innocent Spouse Relief, the IRS considers the information provided and determines which type of relief, if any, may apply.

1. Innocent Spouse Relief

Traditional Innocent Spouse Relief generally concerns understated tax on a joint return resulting from erroneous items attributable to your spouse.

Among the important considerations are whether:

  • You filed a joint return
  • The return contained an understatement of tax
  • The understatement resulted from erroneous items of your spouse
  • You didn't know and had no reason to know of the understatement, or its full extent
  • Considering all the circumstances, it would be unfair to hold you responsible

In some circumstances, partial relief may be possible when you knew about an item but didn’t know its full extent.

2. Separation of Liability Relief

If you’re divorced, legally separated, widowed or haven’t lived with the spouse with whom you filed the joint return during the required period, Separation of Liability Relief may be another possibility.

Rather than necessarily eliminating the entire liability, this form of relief can allocate an understated tax between you and your spouse or former spouse.

Knowledge of the item causing the understatement can affect eligibility.

3. Equitable Relief

Equitable Relief can be particularly important when you don’t qualify for traditional Innocent Spouse Relief or Separation of Liability.

It can potentially apply to an understated tax or an unpaid tax that was correctly reported on a joint return but wasn’t paid, depending on the circumstances.

The IRS considers whether it would be unfair to hold you responsible based on the facts of your situation.

Your Story Matters

An Innocent Spouse Relief request isn’t simply about completing a form.
The circumstances surrounding the tax problem can be extremely important.
Tax Help Hawaii can help organize the facts surrounding questions such as

  • What happened?
  • When did it happen?
  • Who controlled the finances?
  • What did you know at the time?
  • What did your spouse tell you?
  • Were you involved in the business or household finances?
  • Would paying the liability create financial hardship?

The goal is to present the relevant facts and supporting documentation clearly and accurately.

What Does the IRS Consider for Equitable Relief?

The IRS can consider numerous factors when determining whether holding you responsible would be unfair.

These can include:

Current marital status

Potential economic hardship

Knowledge or reason to know about the tax problem

Legal obligations established through divorce or other agreements

Whether you significantly benefited from the unpaid or understated tax

Subsequent compliance with federal tax laws

Relevant mental or physical health circumstances

No single factor necessarily determines the outcome.

Domestic Abuse Can Affect an Innocent Spouse Case

Special considerations can apply when domestic abuse or spousal abuse affected your ability to question a tax return or challenge your spouse’s financial decisions.

For example, the IRS says relief may sometimes remain available even when a requesting spouse knew about errors if abuse, threats or fear prevented that person from challenging the items or caused them to sign the return.

These situations require particularly careful and confidential handling.

FAQ's

Frequently Asked Questions

How Do You Request Innocent Spouse Relief?

The primary IRS form used to request spouse relief is Form 8857 — Request for Innocent Spouse Relief.

You don’t necessarily need to determine which specific category of spouse relief applies before submitting Form 8857. The IRS reviews the information to determine which form of relief, if any, may be available.

Supporting information and documentation can be important in explaining the circumstances surrounding the liability.

Yes—and this is an area where you should not delay.

Different deadlines can apply depending upon the type of relief requested.

Innocent Spouse Relief and Separation of Liability generally have a two-year request period tied to specified IRS activity or notices.

However, Equitable Relief has different timing rules. For example, when seeking equitable relief from a balance due, a request generally can be made during the period the IRS has to collect the tax. Refund or credit requests have separate limitation periods.

Because the applicable deadline depends on the circumstances and relief being sought, have the situation reviewed promptly after receiving an IRS notice.

This is important for potential clients to understand.

When the IRS receives a request for Innocent Spouse Relief, it generally contacts the spouse or former spouse and gives that person an opportunity to participate in the process.

Generally, both spouses also have rights to appeal an IRS determination.

Tax Help Hawaii should explain this before a client begins the process so there are no surprises.

These terms sound similar but involve very different situations. Innocent Spouse Relief concerns responsibility for tax associated with a spouse or former spouse. Injured Spouse Relief generally concerns recovering your share of a joint tax refund that was applied to certain debts owed by your spouse. Injured Spouse Relief generally uses Form 8379, not Form 8857.

A common misconception is that divorce automatically removes responsibility for a previously filed joint tax return.

It generally doesn’t.

Even if a divorce agreement states that your former spouse is responsible for the tax, the IRS may still consider both spouses responsible for a joint federal tax liability unless applicable tax relief is granted.

That’s why IRS spouse-relief provisions can be so important following divorce or separation.

Let Tax Help Hawaii Review Your Situation

Every Innocent Spouse case has its own story. We’ll review the tax years involved, the joint returns, the source of the liability, what you knew about the tax issue, your involvement in the finances and other circumstances relevant to potential relief.

Then we can help determine whether pursuing Innocent Spouse Relief, Separation of Liability Relief or Equitable Relief may be appropriate.

FREE Innocent Spouse Relief Consultation

Serving taxpayers in Maui and throughout Hawaii, with qualifying federal IRS tax-relief matters available nationwide.

CALL TAX HELP HAWAII

310-966-0266

Schedule Your FREE Tax Relief Consultation

Innocent Spouse Relief, Separation of Liability Relief and Equitable Relief depend on individual circumstances and applicable IRS requirements. Filing Form 8857 does not guarantee that relief will be granted.