Dec 1, 2007

Innocent Spouse vs Injured Spouse. What’s the Difference?

We all have heard the terms “Innocent Spouse Relief” and “Injured Spouse” by way of newscasts or even our friends. But just what does each term refer to?

INNOCENT SPOUSE RELIEF - Tax rules are designed to protect married taxpayers who file joint returns from being held responsible for taxes due to erroneous actions by their spouses, such as failing to report income or claiming unsubstantiated deductions. If the innocent spouse can show that he or she didn’t know and didn’t have reason to know about an error that resulted in the underpayment of tax on the joint return, that spouse may be relieved of responsibility for that underpayment. The innocent spouse has two years from the time the IRS begins collection of the underpaid tax to petition for relief by filing Form 8857, Request For Innocent Spouse Relief.

INJURED SPOUSE - A spouse can be considered an injured spouse when a joint return is filed and one spouse owes past-due federal tax and/or child support, a federal debt, or past-due state income tax. The injured spouse can request his or her share of a joint refund by filing Form 8379. Injured Spouse Claim and Allocation. A taxpayer may be considered an injured spouse if:
1) A joint tax return was filed;
2) The taxpayer has reported income (i.e. wages, interest, etc.)
3) The taxpayer has made and reported tax payments (i.e. federal tax withheld or estimated tax payments or claimed the earned income credit; and
4) The taxpayer has an overpayment, all or part of which can be applied against the past-due balance.

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