Finding out you are under investigation for a tax crime because of something your spouse or former spouse did may lead to considerable anxiety. If your spouse handles filing taxes and you have nothing to do with the process, you may feel especially uneasy about the repercussions you could face.
However, the IRS reports that you may, depending on circumstances, be eligible for something called Innocent Spouse Relief. Innocent Spouse Relief seeks to protect husbands and wives whose partners acted outside of tax laws without their spouse’s knowledge of it.
Determining eligibility for Innocent Spouse Relief
You may be able to qualify for Innocent Spouse Relief if you are able to show that you had no knowledge that your spouse made an understatement of tax when you signed your joint return. Furthermore, the IRS must believe, after considering all facts and circumstances, that holding you liable for the understatement of tax would prove unfair. Also, you and your spouse need to not have transferred property between one another in some type of fraudulent tax scheme for you to potentially qualify for Innocent Spouse Relief.
Determining whether you had “actual knowledge”
A big part of determining whether you face legal trouble for your spouse’s tax errors involves whether you had “actual knowledge” of what took place. To determine whether you had “actual knowledge,” the IRS asks if you were aware of the understatement of tax. The tax collection agency also considers if you should have been aware, as a reasonable individual, of the understatement of tax that took place.
Whether you benefit in some way from the tax understatement may also come into play when seeking Innocent Spouse Relief.