Every year, thousands of taxpayers find themselves in a difficult situation – they are unable to pay the taxes they owe, and are at risk of facing serious financial hardship. Fortunately, the IRS offers Innocent Spouse Relief and Offer in Compromise tax relief programs, which can help many people get out of debt and move forward with their lives. In this article, we will discuss how these programs work and how you can take advantage of them if needed.
What is IRS Innocent Spouse Relief?
If you are married and filed a joint tax return that resulted in an IRS tax debt, you may be held jointly and severally liable for the debt even if your spouse earned all the income or was solely responsible for the error. Luckily, IRS Innocent Spouse Relief may help you.
Innocent spouse relief can provide relief from joint and several liability on a joint tax return. This means that if your spouse (or former spouse) improperly reported items on your return, you may not be held responsible for the resulting taxes, interest, and penalties. There are three types of Innocent Spouse Relief: equitable relief, relief by reason of mental incapacity or death, and separation of liability relief.
To qualify for equitable relief, you must show that it would be unfair to hold you liable for the underpayment or deficiency on the joint return. The IRS will consider factors such as whether you knew or had reason to know about the understatement when you signed the return; whether separating your liability would cause an economic hardship; and whether holding you jointly liable would be unfair considering all the facts and circumstances.
If your spouse died or was incapacitated during the time frame in question, you may qualify for relief by reason of mental incapacity or death. To qualify, you must show that at the time he or she signed the return:
1) Your spouse was not aware that there was an understatement of tax due;
2) It would have been apparent to a reasonable.
Advantages of Innocent Spouse Tax Relief
The first advantage of Innocent Spouse Tax Relief is that it can help you if your spouse has unpaid tax debt. This means that you will not be held responsible for the debt and you will not have to pay it back. Additionally, if your spouse is in jail or is facing other legal problems because of the unpaid tax debt, you will not be held liable for those either.
Another advantage of this relief program is that it can help you if you are going through a divorce or are separated from your spouse. If your spouse has accrued a large amount of tax debt, you may be able to get relief from having to pay that debt off. Additionally, if you are facing foreclosure or other financial difficulties because of your spouse’s tax debt, innocent spouse relief can help you keep your home and avoid financial ruin.
Lastly, if your spouse has passed away, you may still be eligible for innocent spouse relief. This can help you clear up any unpaid tax debts so that you do not have to worry about them anymore. It can also provide some financial stability during a difficult time.
How to Request Innocent Spouse Relief from the IRS
Innocent spouse relief allows you to request relief from responsibility for paying taxes, interest, and penalties if your spouse or former spouse incorrectly reported taxes on a joint tax return. You may be eligible for innocent spouse relief if all of the following requirements are met:
– You filed a joint tax return that is incorrect because your spouse or former spouse incorrectly reported taxes, and you did not know (or have reason to know) that the tax return was incorrect at the time you signed it.
– Taxes are owed as a result of the incorrect reporting on the tax return.
– You would face hardship if you were held responsible for paying the taxes, interest, and penalties.
If you meet these requirements, you can request innocent spouse relief by filing Form 8857 with the IRS. You will need to provide information about yourself, your spouse or former spouse, and the tax return in question. The IRS will review your case and determine whether or not you are eligible for innocent spouse relief.