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Tax Blog


Are you an Innocent Spouse?

Maybe, maybe not. As they say, it's complicated.

If you owe taxes as reported on your Joint tax return(s) with your spouse, even if your spouse made all the income, you still owe the taxes. This assumes your spouse supported you and the family.

However, if your spouse did not include all of the income on your tax return(s) and the IRS later discovered it in an audit, and it results in additional taxes, you may be an Innocent Spouse. Please understand that Innocent Spouse claims are not easy nor quick.

According to a recent Forbes article:

Internal Revenue Code Section 6015 authorizes the IRS to grant a spouse relief from a joint return, where it is inequitable to hold the spouse bound for the return. In Revenue Procedure 2003-61, the IRS set forth the following eight factors to be weighed in deciding requests for innocent spouse relief:

Marital status. Whether the spouse requesting relief from the joint income tax return ("requesting spouse") is separated or divorced from the non-requesting spouse.

Economic hardship. Whether the requesting spouse would suffer economic hardship if the Service does not grant relief from the income tax liability.

Knowledge or reason to know. Whether the requesting spouse had knowledge or reason to know that the non-requesting spouse would not pay income tax liability properly reported on the joint income tax return (underpayment case), or of a deficiency of tax in the joint tax return (deficiency case). A tax deficiency generally results from under-reporting of gross income or over-reporting of deductions.

Non-requesting spouse's legal obligation. Whether the non-requesting spouse has a legal obligation to pay the outstanding income tax liability pursuant to a divorce decree or agreement. This factor will not weigh in favor of relief if the requesting spouse knew or had reason to know, when entering into the divorce decree or agreement, that the non-requesting spouse would not pay the income tax liability.

Significant benefit. Whether the requesting spouse received significant benefit (beyond normal support) from the unpaid income tax liability or item giving rise to the deficiency.

Compliance with income tax laws. Whether the requesting spouse has made a good faith effort to comply with income tax laws in the taxable years following the taxable year or years to which the request for relief relates.

Abuse. Whether the non-requesting spouse abused the requesting spouse.

Mental or physical health. Whether the requesting spouse was in poor mental or physical health on the date the requesting spouse signed the joint income tax return or at the time the requesting spouse requested relief from that return.

As said at the beginning, it's complicated. If you owe the IRS more than $20,000 for any reason we can help. We can work through the factors of an innocent spouse or work on an affordable payment plan with the IRS. Or perhaps use bankruptcy to eliminate liability or use an Offer in Compromise to reduce what you owe. As you can see from the above, the rules are very complex. You will benefit from having a team of highly experienced tax professionals helping you work things out.

Call us now for a no cost, no obligation, initial consultation with Jim Demetriou or Mike Montano personally. 888-987-1040

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Demetriou, Montano & Associates is located in West Los Angeles California near the border of Santa Monica. We are licensed to help with tax problem resolution and intervention with IRS troubles throughout the entire United States, with an emphasis on the Southern California communities in and around Los Angeles, Orange County, Long Beach, Santa Monica, Irvine, Newport Beach, Santa Ana, Anaheim, Costa Mesa, Pasadena, Encino, Sherman Oaks, Riverside and San Bernadino.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.