Innocent Spouse Relief

The Innocent Spouse rules (Form 8857) break down into three separate types of relief for a spouse with joint tax debts.

  • Did not know and had no reason to know that the tax was understated; and
  • It would be inequitable to hold the electing spouse liable for the entire joint return liability.

This usually does not work where the tax amount was correctly shown on the return but just was not paid.

This election is available for spouses who are no longer married or have not lived together for the preceding 12 months. If this election is made, the electing spouse will only be liable for the amount of tax that he or she actually knew about. The IRS has the burden of proving that the electing spouse had actual knowledge of the tax deficiency.

This election is usually successful if the facts show that the tax deficiency came from unreported income or overstated deductions attributable to the non-electing spouse, and the electing spouse had no knowledge of these items.

A taxpayer would file for this type of relief if they were liable for community income in a community property state. Or, where their spouse had the money to pay the tax, told the taxpayer that the tax was paid and then spent the money on something else.

Injured Spouse Relief

Injured Spouse Relief is different from Innocent Spouse Relief. When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse.

The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation.

You are considered an injured spouse if:

  • You made and reported tax payments (such as federal income tax withholding or estimated tax payments);
  • You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit.
  • You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax.

Note: If your residence was in a community-property state at any time during the year, you may file Form 8379 even if only item (1) above applies.

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