Skip to Content

Do You Qualify for Innocent Spouse Relief?

Mar 4, 2015 | Written by: Daniel S. Makoski, Esq. |

Most married Americans file their taxes jointly with their spouses. Doing so allows married taxpayers to gain some benefits over those who choose to file “married but separate”, such as higher phase-out limitations for deduction.  However, filing jointly also grants one large benefit to the IRS:  Joint and Several Liability.  Joint and Several Liability permits the IRS to collect a tax liability from one or both spouses without regard to whose income created the liability.

What happens if your spouse fails to include income or takes overly aggressive deductions?  Because of Joint and Several Liability, the IRS will look to both you and your spouse to satisfy the unpaid liability. If your spouse filed incorrect tax returns for multiple years, the liability can grow to be substantial. The question for you is whether you qualify as an “innocent spouse” who can be relieved of Joint and Several Liability, and, therefore, not have to satisfy your spouse’s tax, because you had no knowledge of your spouse’s improper filings.

The IRS established a 4-part test to determine if you qualify for Innocent Spouse Relief:

  • First, you must have filed a “married filing jointly” tax return.  If you filed “married filing separately”, you would not be liable for your spouse’s underpayment and Innocent Spouse Relief would not be necessary.
  •  Second, you must not have known, nor had any reason to know, that your spouse would be filing an incorrect return.  This can be a difficult element to satisfy.  Among other things, the IRS will determine if it is reasonable for you to believe that the combined income of you and your spouse as reported on your return could support your lifestyle.
  •  Third, if you can establish that you did not know and that you had no reason to know that your spouse understated income (or overstated deductions) on your joint tax return, the IRS then determines whether it is unfair to hold you liable for the tax.  One factor of fairness used by the IRS is your current marital status.  If you are divorced or separated when you apply for relief, the IRS will be more likely to find you eligible for relief.
  •  The last element of Innocent Spouse Relief requires you to show that you and your spouse did not engage in a fraudulent scheme. Generally, if you and your spouse transferred assets in an effort to defraud the IRS or any other person, the IRS will find you engaged in a fraudulent scheme and deny the relief.

Innocent Spouse Relief can provide a significant benefit and relieve an often substantial burden. If the IRS grants you relief, you will be released from your spouse’s portion of tax liability for each year in which you were an innocent spouse.

To schedule a consultation to determine if you are an innocent spouse, please contact Daniel S. Makoski, Esq., at Gebhardt & Kiefer, P.C.