Am I responsible for my spouse’s tax mistake?
If you and your spouse (or former spouse) filed a joint tax return, you may be held liable for any mistakes on the document—even if you didn’t know about them when you signed the return. According to the IRS, if you and your spouse file a joint tax return with an erroneous item on it, you may qualify for innocent spouse relief. Simply put, innocent spouse relief releases you from any fines, tax debt, or other penalties associated with the error.
Qualifying for Relief
In order to qualify for innocent spouse relief, you and your spouse must have filed a joint tax return. If you filed separate returns, the IRS will not accept your petition for relief. Second, you must be able to demonstrate that you had no actual knowledge or reason to know about the erroneous item on your return. If you didn’t know about the mistake, your petition may be considered. However, your petition will not be accepted if a reasonable person in your situation would have known about the erroneous item.
For example, if your spouse acquired a large sum of taxable money and bought you a car with it, a reasonable person in your situation would have known about the extra money. Thus, if you spouse attempted to cheat on your joint tax return, you probably wouldn’t qualify for innocent spouse relief—even if you had no actual knowledge of the mistake. Additionally, you may not qualify for relief if you benefited from any activity associated with the mistake.
If your spouse won a large sum of taxable money at a casino and gave it to you but attempted to hide it from the IRS, you may not qualify for relief because you directly benefited from the underreported income. Additionally, the IRS will believe that any reasonable person in your situation would have wondered where the money came from. In the end, the IRS will base its decision on whether or not it would be fair to hold you responsible for the erroneous item.
Other Considerations of the IRS
Before the IRS makes a decision, it will take a variety of other circumstances into consideration. For example, if you have a strong background in business, the IRS may be less sympathetic to your petition because of your familiarity with finances. Additionally, the IRS may be more understanding of your situation if your spouse deliberately lied to you about the error. Your educational background and your financial circumstances may have some bearing on whether or not the IRS accepts your petition for innocent spouse relief.
If you need to file a petition for innocent spouse relief, call an attorney from Okabe & Haushalter. A lawyer from our firm is ready to stand up for your rights!
Do you qualify for innocent spouse relief?
In order to qualify for innocent spouse relief, you must meet a variety of qualifications.
- First, you and your spouse must have filed for a joint tax return. If you filed separately, you will not qualify as you claimed separate responsibility for your return.
- Second, your joint tax return must contain an understatement. In other words: your spouse must have claimed a faulty deduction or failed to report a portion of your income. For example, if your spouse won $10,000 gambling and concealed it from you and the IRS, you may not be held liable for any penalties related to the error.
In order to qualify for innocent spouse relief, you must be able to demonstrate that you were unaware of the erroneous item on the return. Additionally, if you were unaware of the mistake but had reason to know, the IRS may not grant you relief. If a reasonable person in your situation would have been aware of the erroneous item, the IRS may have a hard time believing that you are actually innocent. Talk to an attorney if you need help substantiating your defense; it may be difficult to do without the help of a lawyer. Finally, the IRS will make its decision based on fairness; if the IRS determines that it would be unfair to hold you responsible for the improperly reported item, you will be granted innocent spouse relief.
Fight for Fairness in a Tax Crime Case
Every innocent spouse defense case is different; the IRS will take your individual circumstances into consideration. If you benefited substantially from any events related to the erroneous item, you may not be granted relief. For example, if your spouse won the lottery and bought you a car but didn’t tell you where the money came from, the IRS may not accept your petition for relief. Why? A reasonable person in your situation would have wondered where the money came from. The IRS will also take your educational background, business experience, and current financial circumstances into consideration. Additionally, the IRs will ask whether or not you inquired about potential error on the return. If your spouse lied to you about the presence of an erroneous item on the joint tax return, the IRS may be more sympathetic toward your petition.