Injured vs. Innocent Spouse: Which Tax Relief Applies to You?

Summary

Injured spouse relief is for individuals whose tax refund was seized to cover their spouse’s tax liability or debts.

• • • Innocent spouse relief is for individuals who were unaware of understated taxes by their spouse on a joint tax return.
    • Injured spouse relief focuses on reclaiming funds from the tax refund, while innocent spouse relief seeks to avoid liability for an understated tax.
    • Injured spouse relief is claimed using Form 8379, while innocent spouse relief is claimed using Form 8857.
    • Both forms of relief have eligibility requirements that must be met to qualify, and professional help may be necessary to determine eligibility and complete the forms.

Injured Spouse vs Innocent Spouse: Which One Applies to You?

Many couples reap the benefits of joint tax filings, like higher deductions and possible lower tax liability. However, filing jointly can also lead to situations when you need spousal tax relief. Fortunately, the IRS offers two different programs you can apply for if that’s the case: injured spouse relief and innocent spouse relief.

Although people often use these terms interchangeably, they mean different things. Put simply, an innocent spouse is someone who wasn’t aware of their spouse’s misrepresented tax liability on their tax return. An injured spouse is someone whose tax refund was seized to cover their partner’s tax liability.

Which of these situations applies to you? This guide breaks it down. To get guidance now, talk with an expert at the Timothy S. Hart Law Group about your tax concerns and questions.

What Is an Injured Spouse?

If you’re an injured spouse in relation to taxes, it means that funds from your tax refund have been seized to cover the tax liability or debts of your spouse.

If this describes your situation, the IRS allows you to apply for injured spouse relief. You can then reclaim the money used from your refund to pay off your partner’s tax debts. The IRS may seize tax refunds for the following types of debts:

• Child support that’s overdue
• Federal agency debt
• State income taxes
• State unemployment debts

To qualify for injured spouse relief, you must have filed jointly with your spouse and lost your tax refund to cover those debts, and you cannot have been responsible for the debts in question.

Legal Rights of Injured Spouses

If the IRS finds that you qualify for injured spouse relief, the agency is essentially determining that you should not be required to pay for your spouse’s overdue debts.

The IRS will send you a notice in the event that the agency has reduced your refund to cover your spouse’s tax liability. You then have the right to request relief and reclaim the amount that was used to cover debts that weren’t yours, such as unpaid child support or unpaid income taxes.

Example of When to Apply for Injured Spouse Relief

To illustrate, imagine that you filed a joint tax return with your spouse, showing a refund of $5,000. However, your spouse had an unpaid tax debt from before you were married. The IRS seized the full refund and applied it to your spouse’s old tax debt.

To get your portion of the refund back, you must apply for injured spouse relief. When you apply, you will break down the income and deductions claimed in the tax return between yourself and your spouse. Based on those details, the IRS will determine which part of the debt was yours, and they will send you your part of the refund.

What Is an Innocent Spouse?

An innocent spouse, on the other hand, is someone who was unaware of understated taxes by their spouse, late spouse, or former spouse on the couple’s joint tax return. According to the IRS, to qualify for relief, there must have been no reason for you to be aware of the issue.

Innocent spouse relief only applies to the income taxes of your spouse from their employment or self-employment compensation. So, you can’t claim relief on your income or household employment taxes.

Other exclusions, if applicable, include:

• Individual shared responsibility payments
• Business taxes
• Trust fund recovery penalties

When you’re not sure if your situation qualifies, ask a tax expert before moving forward.

Legal Rights of Innocent Spouses

Innocent spouse relief is granted if the IRS finds that it would be unfair to hold you liable for an understatement of tax that you didn’t know about. So, it’s your right to get relief and avoid that tax liability. This is why it’s called “innocent” spouse relief – you were not the party to make an error.

One important type of innocent spouse relief to know is separation of liability relief. This applies if you are divorced or legally separated from the person you filed your joint tax return with. You generally cannot have lived in the same home with your spouse over the last year. You also may apply for this type of relief if you are a widow or widower.

Example of Innocent Spouse Relief

To explain, imagine that you file a joint return with your spouse. To your knowledge, the return was correct. However, a few months later, you get a letter from the IRS claiming that your spouse did not report $50,000 in income.

Your spouse earned this income from a side business, but they also gambled all of the money away. They very effectively hid everything from you, and you had no reason to know about the debt. You may want to contact a tax attorney to talk about innocent spouse relief. If you qualify, you will not owe any of the tax related to that income.

Now, imagine that your spouse didn’t report $50,000 on the joint return. When you received the letter about the unreported income, you were surprised. You technically didn’t know about the income. However, throughout the last year, you went on several very expensive vacations that were out of the norm for your family.

In this situation, you may still want to consult with an attorney about your options. However, in this case, the IRS may be likely to say that a reasonable person would have had reason to notice the extra income that wasn’t reported.

Innocent vs Injured Spouse Relief

So, what are the key differences between innocent and injured spouse relief from the IRS? Here’s a summary:

• Innocent spouse relief applies when you filed jointly, your spouse understated the tax due on your return, and you weren’t aware of that error.
• Injured spouse relief allows you to reclaim funds if your tax refund was used to pay off your spouse’s tax debts.

Both options can help you get tax relief from the IRS. To find out more about whether you qualify, talk to a tax professional who can help you understand tax law and your best way forward.

How to File for Spousal Relief

Each form of spousal relief has its own form and process with the IRS.

For injured spouse relief, here are the steps to follow:

• Use Form 8379, Injured Spouse Allocation.
• Indicate the tax year you’re applying for and confirm basic information, such as whether you filed jointly and whether the IRS applied your refund to your spouse’s tax debts.
• Provide additional information about your tax return, including your income, deductions, credits, and payments.
• Sign and date the form.
• File the form with your joint return, with your amended joint return, or by itself after the fact.

For innocent spouse relief, follow these steps:

• Use Form 8857, Request for Innocent Spouse Relief.Start by answering the questions to determine eligibility for filing this form (i.e., you filed jointly with your spouse and should not be responsible for an error your spouse made).
• Provide your personal details and information about your spouse.
• Indicate your marital status, education level, and confirmation of your mental state when the returns were filed.
• Indicate your involvement in preparing the returns and your knowledge of the income information provided. This section requires detailed information so be as thorough and accurate as possible.
• Provide information about your financial situation, including your income and expenses.
• Answer questions about any domestic violence or abuse you experienced.
• Attach documentation or additional explanations about your request.
• Sign and date the form.
• The form states that you should not send this form with your tax return. You will send it to one of these two addresses:
  
  • If using USPS, send to:
    • Internal Revenue Service
      P.O. Box 120053
      Covington, KY 41012
  • If using a private service, send to:
    • Internal Revenue Service
      7940 Kentucky Drive, Stop 840F
      Florence, KY 41042

When you need assistance completing these forms, don’t hesitate to contact a tax professional who can ensure you provide all required details and are eligible for spousal relief. Contact the team at Timothy S. Hart Law Group.

Should You Seek Professional Help for Spousal Relief?

The IRS may be able to give you relief from your spouse’s tax liability through injured or innocent spouse relief. This program ensures that you aren’t held liable for something you were not responsible for, even if your spouse is responsible for it.

The two types of spousal relief – injured vs innocent spouse – have different qualification requirements, so make sure you know which type you’re applying for before submitting your IRS form. When you’re not sure, talk to a tax expert.

FAQs About IRS Spousal Relief

What’s the Difference Between Injured and Innocent Spouse?

It’s not always easy to understand injured vs innocent spouse relief. But the two involve different situations with your spouse. Injured spouse relief applies if your tax refund was applied to your spouse’s tax debts, and innocent spouse relief applies if your spouse made an error or omission on your joint tax return that you didn’t know about.

How Do I Know If I Should File as an Injured or Innocent Spouse?

You are considered an injured spouse by the IRS if you received a notice from the agency that it was applying part of your tax refund to your spouse’s tax overdue payments.

You are considered an innocent spouse if you filed a joint tax return with your spouse, your spouse made a mistake on the return, such as underreporting their income, and you were not aware of this error.

What Forms Do I Need to Request Injured Spouse Relief?

If you’re applying for injured spouse relief, you will use Form 8379, Injured Spouse Allocation. You can file this form with your tax return, with your amended return, or at a later date.

What Forms Do I Need to Request Innocent Spouse Relief?

If you’re applying for innocent spouse relief, you will use Form 8857, Request for Innocent Spouse Relief. This form is fairly extensive and requires details about your tax return and the reasons you are applying for relief. You will not send this form with your tax return but to a physical IRS address listed on the Form 8857 instructions.

Can You File for Injured Spouse or Innocent Spouse on TurboTax?

Yes, you can file for spousal relief on TurboTax if that’s the platform you use to submit your tax return. You will select “Yes” when asked if you want to claim injured or innocent spouse relief. Follow all instructions on the page once you indicate that you want to claim this form of relief.

However, this is a very complicated filing, and for best results, you should work directly with a tax pro rather than utilizing this type of software.

At Timothy S. Hart Law Group, we are committed to helping you resolve your tax situation. We will assess your case and help you determine if you should apply for innocent or injured spouse relief with the IRS. We’ll also help you with the process from start to finish, so you can rest assured nothing will be missed.

Contact our law group today to set up a consultation with our team.