Can you apply for Innocent Spouse Relief for your past taxes if you are divorcing an abusive spouse?
Many times in controlling relationships there are money issues. Sometimes those issues can get you into hot water at tax time.
This is a little known relief available to those spouses (or former spouses) who believe they should not be held liable for the tax penalties of their partners.
There are 3 types:
Traditional Innocent Spouse Relief
Separation of Liability Relief
Equitable Relief
The first two deal with a tax error that you were unaware of, and the final deals with a current debt that you know about but may qualify for relief due to special circumstances. We’ll go into each one.
(The info below for each type is coming directly from the IRS website)
Traditional Innocent Spouse Relief
You may request innocent spouse relief if:
-You filed a joint return with your spouse
-Your taxes were understated due to errors on your return
-You didn’t know about the errors
-You live in a community property state
Errors that cause understated taxes include:
-Unreported income
-Incorrect deductions or credits
-Incorrect values given for assets
-When you file a joint tax return with your spouse, regardless of how you file, you are both responsible for the tax and any interest or penalty due.
This is true even if:
-You later divorce
-A divorce decree states that your spouse is responsible for the taxes
-Your spouse earned all of the income
-We consider many facts about your situation before a decision is made.
You are not eligible for relief in any year when:
-You signed an offer in compromise with the IRS
-You signed a closing agreement with the IRS covering the same taxes
-A court made a final decision denying you relief
-You participated in a related court proceeding and didn’t ask for relief
If you meet the criteria above, you have a good chance of qualifying for innocent spouse relief.
Separation of Liability Relief
If your joint tax return understated the amount of taxes due AND you are divorced, separated or no longer living with your spouse, you may be able to pay only your share of the understated taxes.
This splits debt into separate portions. It will divvy up which part you owe and which part your spouse owes so you aren’t responsible for more than your share of the tax bill.
Equitable Relief
This is the one that is most applicable if you are applying due to abuse or coercive control dynamics from your relationship.
If you are not eligible for other forms of relief, you may get relief from paying taxes that your spouse understated or underpaid if it would be unfair to hold you responsible based on all the facts and circumstances.
For instance, if you have a spouse that is an addict and spent money behind your back causing you to not have enough saved to be able to pay the tax bill then you may have a case for equitable relief.
Or if they had a part time job they owed money on and spent all that money on themselves and did not use it for the household.
Or if you would be caused undue hardship to be held responsible for this debt and you did not benefit from the money that the tax was owed on.
Those are a few of the situations the could make you eligible for this type of relief.
You don’t have to apply for each type of tax relief
When you apply for one, the IRS will automatically check to see if you qualify under the other 2 provisions.
So it’s a good idea to apply even if you don’t 100% fit the criteria for traditional relief. There’s no harm in trying.
I applied for the traditional relief but was eligible under the equitable relief type.
It’s a long process. It took me 2 months to hear back from my initial application and 6 months until it was completed. The system is backed up and things are just taking a while. But eventually you will hear back and will have plenty of time to appeal the decision if you need/want to.
For even more info check out these sites
