Most married couples take advantage of joint filing for the money-saving benefits. But along with the savings comes big disadvantages.
When you file jointly, you’re held liable for your spouse’s tax blunders. This means if your spouse under-reports income, you get the blame, too. And it means that the IRS can come after your tax refund to settle owed monies from your current or former spouse. There are ways to remedy this, but the path to recovery is difficult.
Here are the preliminary qualifying questions for Innocent Spouse Relief, which will remove your liability if you can prove to the IRS that you did not know your spouse under-reported income. Using these qualifiers to opt yourself out of the program early on will keep you from experiencing disappointing surprises down the line:
- You filed a joint return with an understatement of tax by your spouse.
- You did not know there was an understatement of tax when they signed the tax return.
- It would be unfair to hold you responsible.
[Related Article: The Tax Form That Could Save Your Refund]
When you submit a request for Innocent Spouse Relief and it’s denied, the IRS will automatically consider Equitable Relief. This is an alternative for those who do not qualify for Innocent Spouse Relief. However, Equitable Relief also adheres to a strict set of rules:
- You do not qualify for innocent spouse relief
- The IRS determines that it is unfair to hold you liable for the understatement of tax taking into account all the facts and circumstances.
Unlike innocent spouse relief or separation of liability, if you qualify for equitable relief, you can get relief from an understatement of tax or an underpayment of tax. (An underpayment of tax is an amount properly shown on the return, but not paid.)
Spousal abuse comes into effect for Equitable Relief. In order to qualify on the basis on spousal abuse, the IRS needs a police report and divorce decree showing abuse.
It’s important to note that the IRS does not usually allow Equitable or Innocent Spouse Relief. The IRS may send you forms for Equitable Relief or Innocent Spouse Relief, but this is no guarantee that you will qualify. If you’re one of the rare few who does qualify, you can file for it using Form 8857, “Request for Innocent Spouse Relief.”