When a joint tax return is filed, both the taxpayer and the spouse become both jointly and individually liable for any tax, interest, or penalties due on the return. If they later divorce, the IRS may still assess interest and penalties on the former spouse even if they didn't have any income at the time the joint return was filed. Form 8857, Request for Innocent Spouse Relief, is sent to the IRS to request that a spouse be relieved from paying a portion of the interest or penalties.
In order for a spouse to receive relief, they must meet the following conditions:
- The tax must be for a joint return for the year the spouse is filing the form;
- The IRS is examining the tax return and proposing to increase the tax liability OR the taxpayer has received such notice from the IRS;
- The return has an understated tax due to omitting or incorrectly reporting any income, deduction, credit, or basis on the return from the filer's spouse;
- The spouse seeking relief must not have known and had no reason to know about the understatement of tax;
- It would be unfair to hold the spouse seeking relief liable for the understatement of tax, taking all the facts and circumstances into account.
Note that partial relief may be granted if the spouse knew about the item omitted or incorrectly reported but not the full extent.
If the taxpayer and spouse live in a community property state, the innocent spouse may be able to qualify for relief by meeting all of these conditions:
- They did not file a joint return for tax year in question.
- The item that belong to the spouse or former spouse was income (for details, refer to the community property rules in IRS Publication 971).
- They did not include the item in gross income on their separate return.
- They can establish that they had no knowledge of or reason to know of the item.
- Taking into account all the facts and circumstances, it would not be fair to include the item in their return.
Relief must be filed within two years after the IRS' first collection attempts in order to be considered, even if they don't have all of their paperwork or information necessary to prove their case.
To claim innocent spouse relief in TaxSlayer Pro, from the Main Menu of the tax return (Form 1040) select:
- Miscellaneous Forms
- Forms 4810, 8082, etc.
- Form 8857 - Request for Innocent Spouse Relief - Start with Part I and complete each part in succession as needed.
Note that the form should be mailed or faxed to the IRS. Your preparer information is included on the form - be sure to provide a copy to the taxpayer.
Note: This article provides general info on Form 8857. It is not intended as tax advice.