Tax Problem Resolution for a Joint Tax Return Problem
A married couple would likely benefit from a joint tax return. However, problems could arise if one of them understates the reported taxes or if there are deductions made that shouldn’t been subtracted. This is a very frustrating situation, especially if the couple have divorced, separated, or one spouse is being left by the other. IRS form 8857, also known as the innocent spouse tax relief, is the way out for innocent spouses. It relieves the innocent spouse from paying the tax, interest, and penalties caused by the omission or wrongly reported items on the tax return made by the guilty spouse.
Common reasons why most people find themselves filing for this IRS Form includes underreported or an incorrect deduction, property basis, or credit claimed. Being divorced or separated from your spouse may work in your favour when applying for these benefits. But, the IRS may hold you responsible if you receive a significant benefit from the tax understatement either directly or indirectly.
Below are the right criteria you should meet to receive an innocent spouse tax relief. You can only qualify if you:
· Have filed a joint return with an understatement of tax due made by your spouse.
· Did not have any idea or reason to suspect that the tax was understated when you signed the return.
· Would be treated unfairly from being held liable for the wrongly stated tax made by your spouse.
· Have no intentions to transfer property between you and your spouse as a part of a fraudulent plot.
· Have requested an innocent spouse relief within 2 years after the date that the IRS has set for the collection activity held against you for the unpaid taxes.
As a part of the tax problem resolution, the IRS will notify the other party if one spouse has filed a claim for innocent spouse relief. Furthermore, if they granted one spouse with a tax relief from a preliminary determination, the other party may still make an appeal before a final decision can be executed.
Other types of tax problem resolutions for spouses include separation of liability and equitable taxes. This is where understated tax, interest, and penalties are divided to both parties. If you don’t qualify for innocent spouse relief, filing for the equitable relief will be the next option. Equitable relief will protect you from unfairly paying the tax penalties because, in the first place, you were not a part of the swindling scheme, involved in tax invasion, and has no single idea that your spouse is tampering your returns.