A marriage is a bonding commitment — one that involves joint responsibility towards all assets and liabilities. Enjoying the tax benefits of being married also means sharing the burden of responsibility for payments, as well.
There are even cases where the IRS will go after an individual for tax debt that they had not been aware of because they were kept in the dark about their spouse’s underreported income or other fraudulent behavior.
In situations where a spouse had no involvement in their partner’s dishonest or evasive actions, an individual can file for innocent spouse relief with the IRS. This can help absolve any unfair tax debt that is associated with their name and tax ID because of their marriage.
Qualifying for innocent tax relief can be more complex than initially believed, though, especially when it comes to proving innocence. The team at Instant Tax Solutions can utilize over 15 years of experience interacting with the IRS and serving clients in need of IRS innocent spouse tax relief to aid you in submitting a comprehensive application.
If you have the IRS breathing down your neck about tax debt that you could not possibly have prior knowledge about, Instant Tax Solutions can review the details of your unique situation and help you protect your best interest with the IRS. An initial consultation with a tax professional is confidential, free, and comes with no obligation. To schedule an appointment, call (888) 485-8109 or contact us online.
Qualifying for Boise IRS Innocent Spouse Tax Relief
Innocent spouse relief is an incredibly specific category of tax relief that will only apply to a limited group of people. There are certain qualifications that must be met for release of liability, and a tax expert can help you compose a comprehensive application that asserts your case.
In order to qualify, all of the following must be true:
- You and your spouse (current or former) filed a joint tax return
- The return understated the amount of taxes owed
- You had no knowledge of the errors that led to the understated tax
- You are now facing demands to pay additional taxes because of these errors
It is critical to note that innocent spouse relief is only available as a result of newly discovered tax burdens related to errors (or fraud) on old tax returns. In other words, the couple must have filed the return in question and paid all estimated tax liability at the time of filing.
An individual cannot apply for innocent spouse relief if the IRS is pursuing declared taxes that have been left unpaid since the bill has been distributed.
There are many types of spousal errors that can lead to this scenario playing out:
- Unreported income
- Incorrect deductions or credits
- Incorrect values given for assets
There are also instances where the type of income does not qualify for spousal relief. It is crucial that all income you are looking to absolve from your tax obligations must be directly earned by the other spouse and recorded on an individual 1040 form.
The IRS does not allow for innocent spouse relief when the taxes are related to:
- Income earned by the person seeking relief
- Payments made to a household employee
- Earnings on businesses (non sole-proprietor/non-self-employed)
- Trust fund recovery penalties for employment taxes
Regardless of what happened to cause an underassessment of your household’s tax obligations, the discovery of it will trigger an audit. That process begins with the IRS reviewing their numbers and checking them twice to put together a new tax assessment.
On top of that, penalties and interest will accrue from the date the amount should have been due, not the new assessment date.
The IRS will pursue all who are responsible for the tax obligation, which typically includes both spouses as a unit. Because a marriage ties two individuals and their liabilities together, most traditional methods of legal or financial relief are inapplicable; innocent spouse relief is a unique exception.
Proving a Partner Was Innocent of Knowledge Related to Spousal Tax Fraud
In order to be granted innocent spouse relief, it is of utmost importance to prove that the petitioner was, in fact, innocent of “actual knowledge.” The spouse seeking relief cannot have had any prior knowledge about the errors or other wrongful acts committed in relation to the tax year in question.
Prior knowledge includes any knowledge of income that wasn’t reported or claims to a fraudulent deduction. You’ll need to prove to the IRS that you were separated entirely from this aspect of your spouse’s finances.
Another factor that the IRS will consider is whether you should have known about the hiccups with the tax declarations, questioning if someone else in your shoes could have reasonably found evidence. This stipulation is important for the IRS to project that a person cannot take advantage of tax codes by claiming to be oblivious to violations when tangible evidence has crossed their path.
Moreover, they should not have committed mistakes, oversights, or engaged in willful avoidance of knowledge of finances or tax obligations. The IRS test, typically, comes down to: “Would a reasonable person exercising regular care have discovered the tax discrepancy?”
Domestic Abuse Victims
There are unique exceptions where the IRS acknowledges that it may not be possible for a spouse to come forward with information about their partner’s misleading report. A spouse who has a credible claim to fear harm or retaliation can still apply for innocent spouse relief even with prior knowledge of their partner’s acts.
In order to claim the domestic abuse exception, the IRS will need proof that the filer was the victim of abuse during some point in the relationship prior to signing the return. This could be a finding by a court or other reasonable evidence that the IRS can rely on for perspective.
The tax lawyers in Boise at Instant Tax Solutions can help you put together your evidence to submit to the IRS along with your application.
Seeking Spokane Separation of Liability Relief
Because the qualifications for innocent spouse relief are so specific, the opportunity is only available to some. In instances where spousal relief is denied, an individual may still be able to file for separation of liability relief.
This will only apply to couples who are divorced or separated (not living together).
Separation of liability relief does not absolve an individual from their obligation to pay back taxes but can ultimately lower the amount so each spouse is responsible for their respective chunk of the total bill due. The IRS will assess both individual incomes and determine each spouse’s contribution to the back taxes.
Sometimes, the spouses may be granted a 50/50 split of the tax obligations, but depending on the assessed income and contribution to the tax debt, some couples may see their bill split in other ways, such as 80/20 or 90/10.
Seeking out Boise Equitable Relief
The term “equitable relief” acts as an umbrella label for situations where an individual does not technically qualify for innocent spouse relief but has some valid reason as to why they should not hold any liability for their spouse’s tax requirements. This type of relief has limited uses and is addressed only on a case-by-case basis.
The IRS will dissect the details of the unique situation and consider the merits of the argument and the possible role of the petitioning spouse in creating or obscuring the tax underpayment.
Injured Spouse Relief
With injured spouse relief, an individual can get back a tax return payment that was taken by the IRS and absorbed into their tax account to pay their spouse’s tax debts. This is similar to innocent spouse relief but is applied retroactively after the payment was taken by the IRS.
Simply put, if the spouse would have qualified for relief before their tax refund was taken, or there is another applicable reason that the IRS finds the individual not responsible, they can have their refund returned to them.
Finding Out About Unpaid Taxes After Filing for Divorce
When a person signs a joint tax return, they become responsible for taxes on all income that was or should have been, reported to the IRS. Filing for divorce or separation as a couple does not nullify your obligations to your joint tax payments.
You won’t be held responsible for returning your ex-spouse files after the divorce, you will still be tied to balances on prior returns. It is also important to note that you cannot be freed from liability simply because you and your spouse agree to it in the official divorce decree.
To separate tax liability, a divorce decree is not enough, and a separating couple will need a specific proceeding held by the court to address it. For a divorcing couple, separation of liability relief or equitable relief can significantly decrease the amount each spouse owes, creating a potential silver lining.
Get Professional Support When Filing for Innocent Spouse Relief in Boise — Contact Instant Tax Solutions Today!
Uncovering tax debt that you are responsible for on paper but have no knowledge of can be an overwhelming moment to unpack. Tax professionals, like our team at Instant Tax Solutions, can offer resources, experience, and knowledge when you are managing the process of filing for relief in order to give you the best chance possible of reducing the amount you owe.
The team from Instant Tax Solutions will be there from start to end, performing an assessment of your taxes all the way while helping you file for any possible appeals or follow-up petitions. To schedule your free, no-obligation consultation, call (888) 485-8109 or contact us online.
