innocent spouse rule
The innocent spouse rule is one of
three types of relief
offered by the
Internal Revenue Service
(IRS) from the
joint and several liability
of a
joint tax return
. The rule provides for relief from responsibility for paying tax, interest, and penalties resulting from erroneous items reported by the applicant’s current or former spouse on their joint return. Erroneous items are any unreported gross income received, or any incorrect deduction, credit, or property basis claimed by that spouse. The applicant can receive total relief if they had no knowledge or reason to know of the erroneous item, or partial relief if they were only unaware of a portion of the erroneous item.
As explained by the
IRS
, a person applying for innocent spouse relief must meet three requirements: (1) that the applicant filed a joint return that has an
understatement of tax
as a result of erroneous items attributable only to their current or former spouse; (2) that the applicant did not know and had no reason to know that there was an understatement of tax at the time they signed the joint tax return; and (3) that it would not be fair to hold the applicant
liable
for their spouse’s understatement of tax, given their situation’s facts and circumstances. Additionally, the applicant and their spouse must not have participated in a
fraudulent transfer
of property. If an applicant meets the requirements, they must file
Form 8857
with the IRS no more than two years after the IRS first attempted to collect the increased tax, unless the applicant qualifies for an exception, such as
for equitable relief
.
Readers can access Publication 971 for detailed information on who qualifies for relief, as well as flowcharts, a question and answer section, and a list of resources to aid readers who think they may qualify.
[Last updated in June of 2020 by the Wex Definitions Team ]
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