What Documentation Is Needed For Innocent Spouse Relief?

When you are married and file jointly, you and your spouse are jointly responsible for your tax debt. But what if your spouse handles the finances and either underreported income or did not pay a tax debt without your knowledge? It could lead to some serious consequences that both you and your spouse would be on the hook for.

This is where innocent spouse relief enters the picture. Innocent spouse relief is a provision in the US tax law that allows a spouse to be relieved from the joint obligation to pay tax, interest, and penalties, if their spouse or former spouse improperly reported or omitted items on their joint tax return, or there is an unpaid balance due which would be inequitable to collect against the requesting spouse. However, an experienced Arizona tax lawyer will tell you that you must meet several criteria first.

Lawyer discussing Innocent Spouse Relief with clients, gavel and wedding rings on the table

Key Eligibility Criteria For Innocent Spouse Relief

To be eligible for innocent spouse relief, you must meet the following specific criteria:

  • Filing a Joint Return: You must have filed a joint return with your spouse for the tax year in question. This is because, on a joint return, both spouses are generally jointly and severally liable for the tax, meaning each spouse is individually responsible for the entire tax liability.
  • Understatement Of Tax: An understatement of tax must be due to “erroneous items” of your spouse. Erroneous items include underreported income, incorrect deductions, credits, or bases.
  • Underpayment Of Tax: When there is an unpaid tax or deficiency.
  • Lack Of Knowledge: You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understatement or underpayment of tax. The IRS will consider whether a reasonable person in your situation would have known about the erroneous items or underpayment.
  • Inequity: It must be unfair to hold you liable for the understatement of tax, taking into account all the facts and circumstances. The IRS considers whether you received any significant benefit from the understatement, whether you have since been divorced or separated from your spouse, and whether you were abused or under duress when signing the return.
  • Time Limit For Relief: You must request innocent spouse relief within two years after the IRS first attempted to collect the tax from you. This is known as the statute of limitations for requesting relief.

Documentation Needed To Apply For Innocent Spouse Relief

When applying for innocent spouse relief, providing comprehensive documentation is crucial to support your claim. Contact a tax lawyer for help applying and to ensure you complete the documentation accurately. You will begin by filling out =”_blank”>Form 8857 which is the primary form requesting innocent spouse relief. From there, you will need the following documents

Personal & Financial Documentation

  • Proof of Marital Status: You will need a marriage certificate to show the date of marriage and/or a divorce decree or separation agreement, if applicable.
  • Tax Returns: Copies of the joint tax returns for the years you are requesting relief.
  • Proof of income: Documents showing your income, such as W-2s, 1099s, or pay stubs.
  • Bank Statements: Personal bank statements for the relevant tax years, to show your financial activity and separate finances from your spouse.
  • Proof Expenses: Documentation of your personal expenses, such as utility bills, mortgage or rent payments, and other household expenses.

Evidence Of Lack Of Knowledge & Inequity

In addition to your personal and financial information, you will be required to provide evidence that you had no knowledge of the incorrect filings. This evidence can be in the form of:

  • Communication Records: Any correspondence such as emails and letters, that show your lack of knowledge about the erroneous items.
  • Sworn Statements Or Affidavits: Statements from you and third parties who can attest to your lack of involvement in financial decisions and your lack of knowledge about the unreported income or erroneous deductions.
  • Financial Records Of Spouse: Any financial records that demonstrate your spouse controlled the finances and did not inform you of the discrepancies.
  • Benefit Documentation: Proof that you did not benefit significantly from the erroneous items. This can include statements showing the financial benefit went to your spouse.
  • Documentation Of Hardship: If applicable, any documentation that shows financial hardship if you were to be held liable, such as medical bills, unemployment records, or records of significant financial responsibilities.
  • Abuse Documentation: If abuse is a factor, any police reports, restraining orders, or medical records that document abuse. This can also include statements from social workers, therapists, or domestic violence shelters.

Our Experienced Tax Lawyers Can Help You Apply for Innocent Spouse Relief!

Let our Arizona tax lawyers at Silver Law help you, ensuring you meet all eligibility criteria and deadlines. We will help you gather and organize the necessary documentation to support your claim. Our team will guide you through the complex application process, providing expert advice at every step of the way.

Contact us today and let us help you achieve the best possible outcome and protect your financial future.

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