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Am I responsible for my spouse’s tax mistake?

If you and your spouse (or former spouse) filed a joint tax return, you may be held liable for any mistakes on the document—even if you didn’t know about them when you signed the return. According to the IRS, if you and your spouse file a joint tax return with an erroneous item on it, you may qualify for innocent spouse relief. Simply put, innocent spouse relief releases you from any fines, tax debt, or other penalties associated with the error.

Qualifying for Relief

In order to qualify for innocent spouse relief, you and your spouse must have filed a joint tax return. If you filed separate returns, the IRS will not accept your petition for relief. Second, you must be able to demonstrate that you had no actual knowledge or reason to know about the erroneous item on your return. If you didn’t know about the mistake, your petition may be considered. However, your petition will not be accepted if a reasonable person in your situation would have known about the erroneous item.

For example, if your spouse acquired a large sum of taxable money and bought you a car with it, a reasonable person in your situation would have known about the extra money. Thus, if you spouse attempted to cheat on your joint tax return, you probably wouldn’t qualify for innocent spouse relief—even if you had no actual knowledge of the mistake. Additionally, you may not qualify for relief if you benefited from any activity associated with the mistake.

If your spouse won a large sum of taxable money at a casino and gave it to you but attempted to hide it from the IRS, you may not qualify for relief because you directly benefited from the underreported income. Additionally, the IRS will believe that any reasonable person in your situation would have wondered where the money came from. In the end, the IRS will base its decision on whether or not it would be fair to hold you responsible for the erroneous item.

Other Considerations of the IRS

Before the IRS makes a decision, it will take a variety of other circumstances into consideration. For example, if you have a strong background in business, the IRS may be less sympathetic to your petition because of your familiarity with finances. Additionally, the IRS may be more understanding of your situation if your spouse deliberately lied to you about the error. Your educational background and your financial circumstances may have some bearing on whether or not the IRS accepts your petition for innocent spouse relief.

If you need to file a petition for innocent spouse relief, call an attorney from Okabe & Haushalter. A lawyer from our firm is ready to stand up for your rights!