Innocent spouse relief comes in three forms. Relief is available in all instances only when you and your spouse originally filed your tax return as “Married Filing Jointly.”
Three Categories of Innocent Spouse Relief are:
- Traditional relief under Internal Revenue code section (IRC) 6015(b);
- Separate Liability Election under IRC 6015(c);
- Equitable relief under IRC 6015(f).
This blog discusses traditional relief:
You are relieved of tax liability (including penalties and interest) for an understatement of income by your spouse under IRS 6015(b) if all of the following rules are met:
- You filed a joint income tax return.
- Erroneous items of your spouse result in an understatement of tax.
- You prove that when you signed the joint return you didn’t know, and didn’t have any reason to know, that the tax was being understated.
- Holding you liable for the tax is unfair, considering all the circumstances of your situation.
- You assert innocent spouse relief within two years from the date the IRS begins collection activity. (If you are requesting equitable relief, the two year limitation generally doesn’t apply.)
- Level of education
- Involvement in the family business
- Lavish or extraordinary expenditures
- The guilty taxpayer’s level of evasiveness and deceit regarding the family’s finances.
For more information, read “IRS makes it easier to apply for Innocent Spouse Relief” , “Innocent Spouse Relief” and IRS Publication 971, Innocent Spouse Relief.