{"id":7395,"date":"2023-10-27T05:17:10","date_gmt":"2023-10-27T05:17:10","guid":{"rendered":"https:\/\/www.irstaxapp.com\/?p=7395"},"modified":"2023-10-27T05:17:19","modified_gmt":"2023-10-27T05:17:19","slug":"spousal-tax-relief","status":"publish","type":"post","link":"https:\/\/www.irstaxapp.com\/spousal-tax-relief\/","title":{"rendered":"3 Spousal Tax Relief from Joint Return Liabilities"},"content":{"rendered":"\n
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Marriage<\/a> is a responsibility! The Federal tax law takes this seriously and literally. So, when you are married and filing a joint tax return, the Internal Revenue Code makes you liable for tax, interest, and penalty on the joint tax return “jointly and severally “, even if you are divorced! However, the IRC also provides three specific reliefs to a spouse <\/a>from tax liabilities from the joint tax return filed when your marriage was valid. This post will discuss these three spousal tax reliefs and how they can be applied to protect the financial well-being of spouses.<\/p>\n\n\n\n

1. Innocent Spouse Relief<\/h2>\n\n\n\n

The first relief to a spouse is “Innocent Spouse Relief<\/strong>“, as outlined in\u00a0IRC Section 6015(b)<\/a>, which allows a spouse to be relieved from liability if, at the time they signed the joint return, they did not know\u2014and had no reason to know\u2014that there was an understatement of tax.\u00a0<\/p>\n\n\n\n

3 Conditions to fulfill to qualify for “innocent spouse relief.”<\/h3>\n\n\n\n
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  1. There must be a joint return with an understatement of tax due to their spouse’s erroneous items, including unreported income received by the non-innocent spouse or incorrect deductions, credits, or basis claimed by the non-innocent spouse.<\/li>\n\n\n\n
  2. You must establish that at the time of signing the joint return, you didn’t know and had no reason to know that there was an understatement for any reason whatsoever, and<\/li>\n\n\n\n
  3. You must substantiate your claim by explaining IRS all the facts and circumstances about your “innocence” and that, in the fairness of things, you should not be held responsible for the “understatement” in the joint tax return. Among many factors that the IRS will consider, one significant point is if you are a substantial beneficiary of that “understatement”.<\/li>\n<\/ol>\n\n\n\n

    For example, let us say, Sarah and John filed a joint tax return. John, who handled the finances, underreported their income by not including money he earned from a freelance job. Sarah, not involved in the finances and unaware of John\u2019s additional income, signed the tax return trusting that John had reported everything accurately. When the IRS discovered the discrepancy, they demanded additional tax, interest, and penalties.<\/p>\n\n\n\n

    Sarah can apply for Innocent Spouse Relief by filing Form 8857. She would need to prove that she did not know, nor had any reason to know, about the unreported income. If she can convince the IRS that it would be unfair to hold her responsible for the additional tax, interest, and penalties, the IRS may grant her innocent spouse relief, and she will not be held liable for the understated tax related to John\u2019s freelance income.<\/p>\n\n\n\n

    2. Separation of Liability Relief<\/h2>\n\n\n\n

    IRC Section 6015(c)<\/a> outlines the second relief to a spouse under which the tax liability between the spouses is divided as if they had filed separately. To qualify for “Separation of Tax Liability Relief”, you must prove that :<\/p>\n\n\n\n