As discussed in an earlier blog, while Married Filing Joint filing status (MFJ) is popular for married taxpayers because it often results in a lower tax liability, another consequence of filing MFJ, is that each spouse is jointly and severally liable for the taxes due on a joint return, regardless of who earned the income, and the IRS can collect from both spouses. In some situations, this can result in an inequitable tax liability for a “Innocent Spouse”.
In these circumstances, the “Innocent Spouse” taxpayer may qualify for Innocent Spouse Relief for all or a part of the tax liability. We often help taxpayers who come to our Richardson TX Tax office with this problem.
IRC 6015 Creates 3 types of innocent spouse relief:
- 6015(b) – Innocent Spouse Relief
- 6015(c) – Separation of Liability
- 6015(f) – Equitable Relief
Today we will cover Innocent Spouse Relief under IRC Section 6015(b).
How Do You Qualify?
- Understatement is due to an erroneous item.
- The Innocent spouse did not know or have reason to know of the understatement.
- It would be inequitable to hold them responsible for the tax.
- The Innocent Spouse requested relief within 2 years of when collection activity began.
The Impact of Relief Under Section 6015(b)
If you are granted relief, you will not automatically be off the hook, but the IRS will allocate the tax liability. The total tax liability is split by the percentage of total income contributed by each taxpayer. For example, Mr. Smith earned $100,000 and Mrs. Smith, the “Innocent Spouse” earned $20,000 and the total tax liability was $30,000. In this case, Mrs. Smith is responsible for 1/6 of the total tax or $5,000.
If the IRS had taken levy action, and there was relief granted with 3 years of the filing of the original return, a refund is available under Section 6015(b) relief.
Do You Need Help?
Do you believe that you may qualify for Innocent Spouse Relief or have an IRS Collection issue that you need help with? If so, we’d be happy to talk with you. Please give me a call at (972) 821-1991 or email me at bob@jablonskyandassociates.