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Form 8857 CPA discusses new rules for IRS Form 8857, Request for Innocent Spouse Relief | Form 8857 instructions

Form 8857 CPA, Request for Innocent Spouse Relief

I provide a free phone consult on innocent spouse relief issues. (910) 399-2705

As an IRS Form 8857 CPA I’ve watched Innocent Spouse Relief evolve. The National Taxpayer Advocate feels Innocent Spouse Relief is in the top 10% of serious tax issues and often generates litigation. I’ll provide information to augment the Form 8857 instructions. This post uses an article in the May 2014 Journal of Accountancy as inspiration. I’ll cover relief from joint and several liability, only one aspect of Form 8879. Please watch for a future posting on the new equitable relief rules in the Form 8857 instructions.

What is Innocent Spouse Relief? Relief from joint and several liability

When married Folks file jointly on Form 1040, each spouse is responsible for the entire tax return. So, even if one spouse pays 50% of the tax due, he/she is still responsible for the other 50% if the other spouse doesn’t pay. An example used in the article referenced above involves one spouse  embezzling money and then being caught. The embezzled funds become taxable income. The IRS then makes both the offending spouse and innocent spouse liable for the previously un-reported taxable income. The “innocent” spouse can file Form 8857 to apply for relief from the additional tax generated by the offending spouse’s embezzled money.

The seven IRS factors for Form 8857, Request for Innocent Spouse Relief, for relief of joint and several liability This isn’t an exhaustive list:

  • Marital status of the innocent spouse. Divorced, legally separated, or the offending spouse is dead.
  • Any economic hardship the innocent spouse will suffer if the IRS doesn’t grant relief.
  • Prior knowledge of issues on the tax return and/or knowledge if the tax was un-paid.
    • The IRS may grant partial innocent spouse relief if the innocent spouse only knew part of erroneous or falsified components on Form 1040.
  • Whether either spouse is required to pay the tax. e.g. divorce decree.
  • Whether the innocent spouse received benefit from the falsified tax return or unpaid tax.
  • Whether the innocent spouse is compliant with the IRS or makes a serious attempt to do so.
  • The innocent spouses mental or physical health.

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