In times gone by, the IRS never granted tax relief to an innocent spouse in the case of a bad marriage. If the spouses happened to file their tax returns together and there seemed to be some fraud involved, even an innocent spouse would have to pay for it. This is not the case now though. There are ways in which an innocent spouse can be given tax relief.
Usually, if there is turbulence in a marriage, the couple’s finances are found to be one of the problems. Money matters can get extremely complicated and so the marriage often suffers owing to these causes. Spouses often file joint tax returns showing them both to be taxpayers. This can be problematic if one of the spouses is filing fraudulent tax returns without letting the other know about it. In the past, the IRS used to view both the spouses as liable in the case of inaccurate tax returns. It’s not just that the innocent spouse would also be forced to pay, but that criminal charges could also be pressed against the innocent one. Thankfully, this is not the case anymore.
The IRS, having recognized that innocent spouses are often victims and are taken advantage of, have offered them three routes to choose from in the case of inaccurate or fraudulent tax returns filed by spouses as joint tax-payers.
• Innocent spouse relief
• Relief by separation of liability
• Equitable relief
To protect yourself using any one of the above-mentioned routes, there are certain prerequisites that you must satisfy. They are, firstly, that you should have filed a joint tax return with inaccurate information. Also, you were unaware of any foul play and had no reason to engage in the same. And lastly, after going through the evidence, holding you liable for inaccurate depiction of tax returns would be unjust.
The IRS, after having carefully evaluated your application will pass either of the following rulings.
• They may agree to waive any tax claims against your name.
• Your account will be split in two, requiring both spouses to pay half the bill. Although this may not seem fair to an absolutely innocent spouse, it straightaway reduces the amount by half.
• Equitable relief is the last option you have. This is like saying that making you pay the amount is manifestly unfair. You must be able to provide evidence to show that you did not engage in any fraudulent activities, you didn’t have any intentions of evading taxes, you didn’t commit any fraud of any kind and that you had no idea what sort of activities your spouse was engaging in. the IRS views claims for equitable relief very suspiciously and so any claims for the same should be handled with utmost care. Only go for this option if all other routes have failed and you are left with no other alternative.
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