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What is innocent spouse relief on income taxes?

On Behalf of | Mar 30, 2020 | Uncategorized |

When people divorce, there are often some surprises that come up in the process. Unfortunately, some people might realize that their spouse didn’t handle something related to income tax returns properly. This can lead to a tax liability for both parties, including the one who didn’t have any idea that there was an issue.

Some individuals opt to file a Form 8857, which is the Request for Innocent Spouse Relief. This is an important tool that you can use if you’re being held liable for a tax obligation that you shouldn’t be.

Why would you be held liable for your ex’s issue?

When a tax return is filed by a married couple, the Internal Revenue Service assumes that both parties know what’s included in the return. It automatically counts both parties that are on the return as holding equal obligation for any tax liability. This doesn’t go away just because you and your ex divorce.

Some people think that they don’t have anything to worry about regarding this if their divorce decree notes that only one party is responsible for the debt. Unfortunately, the IRS doesn’t follow this decree and will still hold both spouses liable for the tax obligations.

How can you stop the obligation?

If you shouldn’t be held accountable for the tax obligation, you can file the Form 8857. You have two years from the date that you receive the notice that you have a tax obligation. While this might seem like a long time, it really isn’t. You should file the form immediately so that time doesn’t bypass you and so that you have time to address any issues that might creep up.

There are instances in which the petition for relief will be denied. In these cases, you do have the right to file an appeal. The initial decision can take up to six months after you file the petition to come, so you may need to wait a while.

Remember, there are specific criteria that must be met in order for you to get this type of relief. There are different levels of relief that come with this form, so be sure you understand which one might apply to your situation. Typically, it’s best to work with someone who’s familiar with these situations so that you won’t have to deal with wasted time because of mistakes.