Innocent Spouse Relief

Many married taxpayers throughout the United States, particularly in Los Angeles choose to file a joint tax return to enjoy certain benefits this filing status allows. The downfall of such a filing is that both taxpayers are responsible for the tax and any interest or penalty due on the joint return even if they later divorce. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.

In some cases, a spouse will be relieved of the tax, interest, and penalties on a joint tax return. Three types of relief are available.

1. Innocent spouse relief.
2. Separation of liability.
3. Equitable relief.

Each of these types has its own requirements and qualifications, which is important to note. Your best course of action to determine whether Innocent Spouse Relief is available for you should be to have an expert tax lawyer assess your situation first.

However, there are general requirement for obtaining a relief. In order to qualify for innocent spouse relief, you must meet the following conditions:

• a joint return understated taxes because of erroneous claims by the requesting party's spouse;
• when the return was signed, the innocent spouse did not know or have reason to know that there was an understatement of tax; and
• all the circumstances considered, it would be unfair to hold the requesting party liable for the understatement of tax.

To qualify for separation of liability, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857.

• the parties filing the joint return are no longer married or are legally separated, or
• the joint filers were not members of the same household at any time during the 12-month period before the relief is sought.

This relief is not available if spouses transfer assets between themselves to avoid tax or as part of a fraudulent scheme. Another disqualifying factor is actual knowledge of the other spouse's erroneous items on a return that gave rise to the deficiency.

As a last resort, equitable relief may be available when there has not been any fraud and under given conditions it would be unfair to hold the spouse liable for the understatement or underpayment of tax. IRS takes into account a wide range of "fairness" factors. There is no complete list, but some examples include:

• separation or divorce,
• economic hardship if relief is not granted, and
• the fact that the tax for which relief is sought is attributable to the other spouse

On the other hand, some factor may weight against equitable relief:

• knowledge of the items causing the understated tax,
• receiving a significant benefit from that understatement, or
• not making a good-faith effort to comply with federal income tax laws for the tax year in question.

Get an innocent spouse relief with Los Angeles Tax Attorneys!

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