How to Distinguish Between Injured Spouse and Innocent Spouse

An injured spouse can get relief when the IRS withholds a joint refund due to debts or obligations of the other spouse. An innocent spouse can get relief when the other spouse makes false reports on a joint return.

Difficulty:

Moderately Easy

Instructions

Things You'll Need

• Calculators
• File Cabinets
• File Folders
• Paper And Pencils
• Tax Preparation Software

Injured Spouse Relief

1. Verify that you filed a joint return with your spouse.

2. Determine that the IRS has withheld or will withhold a tax refund because your spouse is past due on payments such as child support, spousal support, student loans or other federal or state debts.

3. Obtain Form 8379.

4. Allocate income, adjustments, deductions and credits between yourself and your spouse in Part 2 of the form.

5. Send Form 8379 to the IRS, either with the joint return or separately after the joint return has been sent.

Innocent Spouse Relief

1. Verify that you filed a joint return with your spouse.

2. Determine that your spouse improperly or dishonestly reported items on your joint return that resulted in an understatement of taxes. In almost all cases, this determination will come from an IRS notice, demand or collection action.

3. Make sure you did not know your spouse was giving erroneous information when you signed the joint return. Intentional ignorance is not a good enough excuse. You basically need to have been deceived.

4. Determine that the understatement did not bring a significant benefit to you. The deception is not considered a significant benefit simply because your spouse supports you. But if your spouse was handling your investments and lied about them, you significantly benefited because your tax was understated.

5. Obtain Form 8857. Fill it out and send it to the IRS.

Tips & Warnings

• Allocate the maximum amount of deductions, credits and payments to the injured spouse, but remember that the allocation must be reasonable and defensible.

• The IRS will calculate the tax on each spouse according to the allocations and will calculate your tax refund for you.

• If your spouse takes money that was intended for tax payment but doesn't pay those taxes, you might qualify for equitable relief, even if you don't qualify for innocent spouse relief. You must not have known - or have had no reason to know - that your spouse took the money. The IRS is not required to give you equitable relief, but if you request it, the IRS might comply.

• Given all the facts, the IRS determines whether it would be unfair to hold you liable for the tax. Your education level and knowledge of financial matters is relevant. Attach a statement explaining why you did not know and could not have known what your spouse was doing.

• If you knew your spouse was being deceitful in some areas but not in others, you might qualify for partial relief.

• The injured spouse must have income and payments to qualify for injured spouse relief.

• You cannot allocate your spouse's personal exemption to yourself.