Married couples are jointly responsible for the entire tax liability. The Internal Revenue Service (IRS) collects the tax due from either one of you or both of you. The tax you pay generally depends on your joint income and filing status.
If you file a joint tax return, both you and your partner are liable and responsible for the tax and any penalties or interest due on the return, even if you separate later on or get a divorce. Generally, you stay liable for the tax unless you prove that you had no reason or didn’t know about the liability.
It may be due to an incorrect credit, tax deduction, or bases your spouse or ex-spouse claimed. Also, it might be because of unreported income. There are two types of relief available when a joint return is filed: injured spouse relief and innocent spouse relief.
Taxpayers often confuse the two all the time. For a little help, here’s what you need to know about injured spouses and innocent spouses and their difference.
Who is an Injured Spouse?
The “injured spouse” refers to a spouse who’s been implicated by the application of the tax laws to a joint income tax return to offset the debts of their spouse or former spouse. And since they’ve been financially injured or harmed by this, that spouse can recover their share of the tax refund from the IRS.
You must first complete and file form 8379 to file for an injured spouse allocation. You must also include a copy of your joint return and all other forms and schedules related to your joint return. The IRS will then process your claim and issue you a refund for the portion of your taxes.
An injured spouse form must be filed for each tax year in which you were injured. So, if you were injured in 2014 and 2015, you would need to file two separate forms – one for each year.
If you file a paper version, note that it takes at least 14 weeks to process an injured spouse claim. On the other hand, it’ll take 11 weeks if you file it electronically. The IRS may decide that someone is ineligible for an injured spouse refund or doesn’t deserve the amount they’ve claimed.
When this happens, the IRS will notify both spouses explaining why the refund was reduced or denied. If you believe that the IRS made a mistake, you can file an appeal within 60 days of receiving the notice.
Who is an Innocent Spouse
An “innocent spouse” refers to a spouse who did not know and had no reason to know that there was unreported income or underreported taxes on a jointly filed tax return. The innocent spouse relief allows a spouse to seek relief from being severally and jointly liable for taxes and penalties with the other spouse.
The rule was made because of the spouses not telling the truth about their financial situation to their partners. Taxpayers need to meet the following criteria to be eligible for this relief:
- no knowledge of the error
- filed a joint return with an understatement of tax responsibility linking to their spouse
- the IRS need to agree if it’s fair to relieve the taxpayer of the tax burden
- the taxpayer must apply within two years from the date the IRS first began collection activity against them
The most problematic requirement of this relief is that the taxpayer must not know the error in question. If the taxpayer has even the slightest idea that there was an error, they are not eligible for this relief. It can often be interpreted very broadly by the IRS.
This relief is not automatic, and the taxpayer must apply for it. The process can be very daunting, but some services can help. If you think you might be eligible for innocent spouse relief, the first step is to contact the IRS and request a collection due process hearing.
You can request innocent spouse relief any time after the IRS begins collection activities on your joint tax return. However, it’s best to request relief as soon as you realize that you may not be responsible for the tax debt.
If you’re facing a tax debt that you can’t afford to pay or your spouse has left you in a financial bind, the IRS offers some relief through its injured spouse and innocent spouse programs. Both programs have specific eligibility requirements, so check the criteria before you apply. And keep in mind that you may need to file a separate form to request relief under either program.
Most importantly, remember that injured and innocent are different things. An injured spouse is someone who didn’t cause the tax debt but may be liable for it because they filed a joint return with the person who did. On the other hand, an innocent spouse is someone who had no idea that there was any problem with the taxes and wouldn’t have known to ask about it.
You shouldn’t confuse an injured spouse claim with an innocent spouse claim. The two are very different and can have different outcomes.
Injured spouse allocation
- File a form 8379 if you’re claiming an injured spouse tax refund.
- An injured spouse claim is a joint tax return with a spouse with debt, like child support, student loan, or a past-due federal income tax withholding.
- You can file for this relief if you don’t want to repay your spouse’s debt.
- When you’re aware that part or all of your share was due to your spouse’s obligations.
- You must file this tax relief for each year you want to get your tax refund.
Innocent spouse relief
- File a form 8875 if you request innocent spouse relief.
- You may be relieved of all or part of the joint tax liability.
- You can seek innocent spouse relief if there’s an understatement of your spouse claimed false credits, or you’re no longer living with your spouse (separated, divorced), or if you don’t know any of the errors made.