Innocent Spouse Relief

Joint returns mean joint liability

Signing a joint 1040 makes both spouses liable for the tax, even if one spouse earned the income or hid a 1099. Innocent spouse relief (IRC §6015) is how the IRS sometimes splits that liability. It is fact-intensive, the other spouse is notified, and it is not automatic after a divorce.

Three forms of relief

• Innocent spouse (§6015(b)): there is an understatement from erroneous items of the other spouse, you did not know and had no reason to know, and it is inequitable to hold you liable.
• Separation of liability (§6015(c)): you are divorced, widowed, or separated (or have lived apart for 12 months). The understatement is allocated as if you had filed separately. Actual knowledge of the item bars relief for that item.
• Equitable relief (§6015(f)): the safety net when (b) or (c) does not fit, including underpayment cases (the tax was reported but not paid). Rev. Proc. 2013-34 still frames the stream of factors: economic hardship, knowledge, legal obligations in the divorce decree, significant benefit, and compliance after the year at issue.

How to apply

1. File Form 8857. Do not wait for the “right time.” For (b) and (c), the statute is generally two years from the start of collection activity; (f) follows a longer period tied to the collection statute.
2. Attach the divorce decree, bank records, and a narrative of what you knew when you signed.
3. The non-requesting spouse gets a chance to participate. Plan for that.
4. If the IRS denies, Tax Court review is available in many innocent-spouse cases.

What this is not

Innocent spouse relief does not unwind a refund that was already issued to the other spouse, and it does not by itself stop a state tax agency. Injured spouse (Form 8379) is a different remedy used when a refund on a joint return is offset for the other spouse’s separate debt.