Injured Spouse vs Innocent Spouse - Which Applies

Understanding Injured Spouse and Innocent Spouse Relief

When tax time comes around, issues may arise regarding joint tax liabilities between spouses. Two primary forms of relief are available for married taxpayers facing unique challenges: Injured Spouse Relief and Innocent Spouse Relief. Both serve distinct purposes and have specific eligibility criteria. This comprehensive guide will help you understand which, if either, applies to your situation.

Injured Spouse Relief

Injured Spouse Relief applies when one spouse's share of a tax refund is taken to satisfy the other spouse's past due debt, such as unpaid child support or student loans. This relief ensures the non-liable spouse can recover their portion of the refund. Key points for eligibility:

• The couple must have filed a joint tax return.
• One spouse must have had a portion of the refund applied to a legally owed past debt by the other spouse.
• The ‘injured’ spouse must have reported income and made tax payments, such as through withholdings or estimated payments.

Innocent Spouse Relief

In contrast, Innocent Spouse Relief can relieve a spouse from joint liability on a tax return filed with their partner. This relief is usually pursued when one spouse believes the other misrepresented the tax situation, leading to an outstanding tax liability. To qualify:

• A joint tax return must have been filed.
• The tax understatement must be attributable to one spouse.
• The seeking spouse must prove they had no knowledge, or reason to know, of the error when signing the return.
• It would be unfair to hold the requesting spouse liable.

Applying for Injured Spouse Relief

To request Injured Spouse Relief, file Form 8379, Injured Spouse Allocation, with the IRS. This can be done with your joint return or separately after filing. The IRS advises including past returns to expedite the process. Typically, relief is granted if you meet all criteria and the process can take up to eight weeks.

Applying for Innocent Spouse Relief

For Innocent Spouse Relief, complete Form 8857, Request for Innocent Spouse Relief. This form allows the IRS to determine the extent of relief possible. Additional documents may be requested to support your claim. It's crucial to apply within two years of IRS collection action. The IRS will evaluate fairness factors and intentions during consideration.

IRS Citations and Regulations

Understanding IRS guidelines and where to find them is important:

• Injured Spouse Relief: IRS Form 8379 Instructions - www.irs.gov
• Innocent Spouse Relief: IRS Publication 971 - www.irs.gov

Actionable Steps

1. Evaluate your tax situation to determine which relief applies.
2. Collect necessary tax documents and correspondences from the IRS.
3. Complete and submit Form 8379 or Form 8857, as applicable.
4. Consult a tax professional if in doubt to ensure accuracy and compliance.

FAQs on Injured and Innocent Spouse Relief

1. What is the main difference between injured and innocent spouse relief? Injured Spouse Relief pertains to allocation issues, whereas Innocent Spouse Relief concerns erroneous unpaid taxes due to one spouse’s incorrect reporting.
2. Can both forms of relief be applied for at the same time? No, they address different issues. Select according to your specific tax situation.
3. How long does the relief process typically take? Injured Spouse Relief can take up to eight weeks, while Innocent Spouse Relief varies more due to complexity.
4. Will applying for relief affect my tax records? It can affect current records by adjusting liabilities or refunds. Records of applications are kept by the IRS.
5. If denied, can I appeal either relief decision? Yes, the IRS allows for appeals through the Taxpayer Advocate Service.
6. What happens if the other spouse objects to the relief request? In Innocent Spouse cases, the other spouse will be notified and allowed to respond.
7. Are there income limitations for applying? No, income limitations do not apply to either form of relief.

For a more thorough understanding of your tax obligations and relief options, consider contacting a tax professional. Visit our dashboard for personalized assistance.