Nicholas Frey

When a couple files a joint tax return, they are both legally responsible for any tax owed on that return. However, sometimes one spouse may not have known about the tax problem and should not be held responsible for the entire tax debt. In these cases, the IRS offers innocent spouse relief, which allows an innocent spouse to be relieved of the tax, interest, and penalties on a joint tax return.

In order to qualify for innocent spouse relief, the IRS has established several requirements that must be met. These requirements are set forth in Internal Revenue Code (IRC) § 6015, which governs innocent spouse relief.

First, the innocent spouse must have filed a joint tax return with the spouse who caused the tax problem. The innocent spouse relief only applies to joint tax returns, not to separate tax returns or to tax problems that arose before or after the joint tax return was filed.

Second, the innocent spouse must have had no knowledge or reason to know about the tax problem. This means that the innocent spouse did not know, and did not have reason to know, that the tax was not paid or that there was a mistake on the tax return. In order to determine whether the innocent spouse had reason to know about the tax problem, the IRS looks at a number of factors, including the spouse's level of education, involvement in the family finances, and any indications of fraud or deceit by the other spouse.

Third, it must be unfair to hold the innocent spouse responsible for the tax debt. The IRS will look at a number of factors to determine whether it is unfair to hold the innocent spouse responsible, including the couple's living situation, the innocent spouse's level of involvement in the tax preparation process, and the economic hardship that would result if the innocent spouse were held responsible.

In addition to these three requirements, there are also several other factors that the IRS may consider when deciding whether to grant innocent spouse relief. For example, the IRS may consider whether the innocent spouse received a significant benefit from the unpaid tax or whether the innocent spouse has made an effort to comply with tax laws in the past.

If the innocent spouse meets all of the requirements for innocent spouse relief, the IRS may grant relief from some or all of the tax debt, interest, and penalties. The amount of relief granted will depend on the specific circumstances of the case.

If you live in a community property state such as Texas, the rules for innocent spouse relief may be different. In community property states, most property acquired during the marriage is considered to be owned equally by both spouses. This means that each spouse is generally responsible for one-half of the tax liability on a joint tax return, even if only one spouse earned the income.

However, there are exceptions to this rule, including situations where one spouse can prove that they did not know about the income or deductions on the joint tax return. In community property states, the IRS may still grant innocent spouse relief to the innocent spouse, but the rules for determining eligibility may be different.

For example, in community property states, the innocent spouse may need to prove that they did not benefit from the income or deductions in question in order to qualify for relief. Additionally, the IRS may consider the innocent spouse's level of involvement in the family finances and whether they had reason to know about the tax problem.

Innocent spouse relief can provide a way for an innocent spouse to be relieved of tax, interest, and penalties owed on a joint tax return. However, in order to qualify for this relief, the innocent spouse must meet several strict requirements set forth in IRC § 6015. If you believe you may be eligible for innocent spouse relief, it may be helpful to consult with a tax professional who can advise you on the best course of action.