November 12, 2018 | Tax Relief
Tax Help Innocent Spouse IRS Tax Relief
It sometimes comes as a surprise to a client that they owe taxes, and there ex-spouse does not owe for a tax year they were married and filed a joint income tax return. When a taxpayer files a joint income tax return, they both become 100% liable for the income taxes owed. Now tax help is needed. For example, say you file a tax return for the 2017 tax year, and $5,000 is owed because your spouse earned undisclosed self employment income, and did not pay estimated tax payments. Once you file that tax return and are audited, you become liable for the tax debt if it is not paid. Furthermore, you become liable for 100% of the tax debt, not just 1/2 of it and need IRS Tax Relief.
This result may seem fair if you remain married and shared household finances, but it is not fair is you subsequently divorce and are now liable with all the tax debt. In these cases, there is relief and its called innocent spouse relief. It important to ask for the relief in a timely manner by filing a Form 8857. It important to realize, that the tax liability has to come at a surprise for innocent spouse relief to work. If you knew when the tax return was filed that there existed an unpaid tax, then you may still be able to obtain relief under the equitable IRS Tax relief provisions.
To obtain relief, you will need IRS tax help to prove that based upon all the facts and circumstances, that it was not your income that caused the unpaid tax liability. In most cases where you demonstrate that it was not your income, and your divorced, the IRS will grant relief. In the you are not granted innocent spouse IRS Tax Relief, you may be eligible for Equitable Relief. Equitable Relief will be granted in cases of both understated tax on the income tax return, and the underpayment of tax owed on the tax return. It is also unusually a condition of such relief that you and your spouse or ex-spouse did not transfer assets between you. The other main requirement is that you can prove that it would be unfair to hold you liable for the tax balance owed, and that it would cause you economic hardship. In the case of underpayment of the taxes owed, the IRS will also examine whether you had knowledge of the circumstances, or had a reason to know the taxes were not being paid. The IRS will look at your level of education that you obtained, your involvement in the activity that caused the tax debt, and your involvement with the general household finances and business expertise. Other factors that tax help you in being granted equitable IRS Tax relief include 1) whether your spouse abused you (physically or mentally), and 2) whether you were poor health at the time the tax liability originated.
Therefore, if you do not qualify for innocent spouse IRS tax relief, all is not lost since you may qualify for equitable IRS tax relief and achieve the same beneficial result of shifting the tax liability to the person who generated the taxable income.