The Law Offices of Matthew W. Stanley
Tax Relief for "Innocent Spouses"
For many married couples, it makes good financial sense to file a joint income tax return. The federal tax code offers married joint filers several benefits, including increased limits for charitable deductions, certain retirement account benefits, and lower taxation rates in many cases.
In some situations, however, filing a joint return can have its downsides. When an individual files a joint return with a spouse, he or she is individually responsible for any mistakes and taxes due on that return. Fortunately, it is sometimes possible to obtain an exception to tax liability under "innocent spouse relief." Although innocent spouse relief doesn't have to involve a divorce, it is frequently used by divorcing spouses to dispute tax errors that result in one spouse being forced to pay for the other's mistakes.
How Do I Apply for Innocent Spouse Relief?
If you believe your spouse or former spouse took improper deductions or failed to report taxable income, it's important to speak to an experienced tax attorney right away.
Individuals who wish to obtain innocent spouse relief must file Form 8857 with the IRS. The form requires the applicant taxpayer to explain why he or she believes the relief is appropriate and asks the IRS to create a separate tax liability for the applicant.
The form requires the applicant to provide a range of information about how the return was prepared and how much knowledge he or she had about the preparation process. In determining whether the relief is appropriate, the IRS considers a number of factors, including:
· The type of error
· The value of the error
· How involved the applicant was in the preparation process
· Whether the applicant has experience in business transactions
· The finances of each spouse
· The education levels of each spouse
· Whether the parties have a pattern of erroneous returns
Because each case is different, the IRS may consider other factors in deciding whether to grant tax relief to an innocent spouse.
This website has been prepared by the Law Offices of Matthew W. Stanley for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.