What is Innocent Spouse Relief? (FAQ)
In this article, you’ll learn:
- What Innocent Spouse Relief is and how it might help you with tax debt
- How to qualify and apply for Innocent Spouse Relief
What is Innocent Spouse Relief?
Innocent spouse relief is when the IRS removes your responsibility for all or part of your spouse’s or former spouse’s tax debts, interest, and penalties.
When you sign a joint income tax return, both you and your spouse agree to be responsible for any tax debt related to the tax return. This means that you could be responsible for the entire tax debt for that tax year, even if you did not earn any money that year. If you qualify, innocent spouse relief can help relieve you of that responsibility.
How can Innocent Spouse Relief help me?
There are four kinds of relief for when you owe money to the IRS because of the actions of your spouse or former spouse. You file the same form to ask for one of the four kinds of relief. That form is called Form 8857.
1. Separation of Liability
Under separation of liability, the IRS may separate your tax debt from your spouse’s tax debt even though you filed a joint tax return. After the liability is separated, you are no longer responsible for your spouse’s part of the tax debt.
2. Innocent Spouse Relief
Innocent spouse relief provides you with relief from taxes you owe because your spouse did not report all of their income or improperly claimed deductions or credits.
3. Equitable Relief
Even if you do not qualify for innocent spouse relief or separation of liability, you may qualify for equitable relief. You may get equitable relief if, after considering all the facts and circumstances, it would be unfair to hold you liable for the tax. This relief is only available for an unpaid tax. An unpaid tax is a tax that was on your return but hasn’t been paid.
4. Community Property Relief
The last kind of relief only deals with when couples live in a community property state. Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Montana is not a community property state. To learn more, you’ll want to visit the IRS website.
Do I qualify for Innocent Spouse Relief?
In deciding whether to grant relief from taxes, the IRS may consider whether:
- Your spouse abused you;
- Your spouse controlled your family’s finances;
- You had or have a mental or physical health problem;
- You were involved in preparing your taxes;
- You are unable to pay your bills;
- English is your second language;
- You are divorced, legally separated, or have been physically separated for 12 months;
- Your spouse has a higher education level than you;
- Your divorce decree requires your spouse to pay the tax debt; and
- The debt is due solely to your spouse’s income.
The IRS may also consider other factors.
How do I ask for Innocent Spouse Relief?
Here is the process for asking for Innocent Spouse Relief.
- Step One: Complete and file IRS Form 8857. You’ll also attach a statement explaining why you qualify. If you are asking for relief for more than one year, you file only one form. But, you’ll include a separate statement for each year and explain why you qualify for that year.
- Step Two: In general, the IRS will stop trying to collect any tax from the years you ask for relief.
- Step Three: The IRS will let the other spouse know that you filed for Innocent Spouse Relief. We’ll talk about what to do if you have privacy concerns later.
- Step Four: The other spouse will be allowed to take part in the process if they want. They can ask for Innocent Spouse Relief as well.
- Step Five: The IRS will mail both parties a “Preliminary Determination Letter” after giving the other spouse a chance to take part. The letter will state the IRS’s decision on you and/or your spouse’s request for relief. Both parties may appeal that decision with the IRS Office of Appeals.
- Step Six: The IRS will mail both parties a “Final Determination Letter.” The IRS Office of Appeals will issue the letter if either one of the spouse’s appealed the preliminary one.
- Step Seven: Either party has the right to file an Appeal of the Final Determination Letter to Tax Court.
It may be helpful to work with a lawyer to ask for Innocent Spouse Relief. Learn more about how to apply for free legal help in Montana.
When should I file?
Do not file for Innocent Spouse Relief with your income tax return. But, you should file Form 8857 as soon as you become aware of the tax debt. You may become aware of the tax debt when:
- The IRS examines or audits your income tax return;
- The IRS sends you a notice; or
- Your tax refund is withheld by the IRS to pay the debt.
Important: In general, you must file no more than 2 years after the IRS first tries to collect the tax from you. You can learn more about exceptions.
Can my ex file for Innocent Spouse Relief?
Yes. Both spouses may apply for Innocent Spouse Relief. The IRS will review both applications. The IRS will notify your former spouse of your application. If your former spouse submits an application, you will be notified.
What if I have privacy concerns?
The IRS will not tell your spouse or ex-spouse:
- Your name,
- Phone numbers, or
Any other information you give the IRS to make a decision on your request for relief could be shared with your spouse or ex-spouse. If you have concerns about your privacy or the privacy of others, you should redact or black out personal information in the forms you submit.
What if I owe state taxes to the Montana Department of Revenue?
The Department of Revenue also has a process for Innocent Spouse Relief. The process is like the one for the IRS, but there is not form.
To apply for Innocent Spouse Relief, write a statement including:
- The tax years you’re requesting relief for,
- The reasons you’re requesting relief,
- Complete copies of all letters sent to and received from the IRS,
- The IRS documents granting you relief for the tax period you’re applying for,
- Any court order stating your spouse or former spouse must pay Montana individual income taxes, and
- Any other information showing why relief should be granted as required by Montana law.
You can find what the law in Montana says you need to qualify for Innocent Spouse Relief at Montana Code Annotated (M.C.A.) § 15-30-2646. The “§” is a symbol that means section. 15 is the Title number. 30 is the Chapter number. And, 2646 is the Section number.
The Montana Department of Revenue will base its decision on the same factors as the IRS. If you don’t agree with its decision, you can file a tax appeal.
You can learn more about state income tax relief programs on the Montana Department of Revenue website.
What is Injured Spouse Relief?
Injured Spouse Relief is different than Innocent Spouse Relief. You should apply for Injured Spouse Relief if you are married and file jointly with your spouse and your tax refund is taken to pay your spouse’s separate debts. A common example is your spouse’s back child support. If you file IRS Form 8379 with your tax return, you may get your portion of the refund. [Link]
You may be able to get Injured Spouse Assistance from the Montana Department of Revenue.
- The State Bar Lawyer Referral Service may provide you with contact information for attorneys who provide the type of help you are seeking, for a fee. You can contact the State Bar Lawyer Referral Service at (406) 449-6577 or montanabar.org.
- Montana Legal Services Association (MLSA) provides free civil, non-criminal legal help to eligible clients. Learn more about how to apply for free legal help in Montana.
- If you qualify for help from MLSA, you may be able to get free legal advice from a volunteer attorney by email using Ask Karla.
- Download From 8857 to ask for Innocent Spouse Relief
- Learn about Montana Department of Revenue’s tax relief programs