Dealing with tax controversies can be daunting, especially when one spouse finds themselves held responsible for the other’s tax troubles. In California, there is a safety net for spouses who find themselves in financial hot water due to their partner’s tax mistakes.
Innocent Spouse Relief is a rule that helps spouses who can prove they did not know about or had no reason to know about their partner’s tax issues.
How to qualify for Innocent Spouse Relief
To get Innocent Spouse Relief, there are certain things you have to show. First, you have to prove that the tax problems are only because of your partner’s actions. You also need to show that when you signed the tax papers, you did not know or had no reason to know about the mistakes.
Innocent Spouse Relief also looks at fairness. Tax authorities consider how much the innocent spouse knew about money matters, if there was any abuse or force involved and if it is fair to blame them for the tax issues.
How to apply for relief
If you want Innocent Spouse Relief, you need to fill out a form called Form 8857 and send it to the California Franchise Tax Board (FTB). This form asks for a lot of details about your tax return and needs proof to back up your claim.
It is important to gather all the right documents, like financial records and messages, to show you did not know about the tax problems. Also, make sure to submit the form on time and with all the correct info to have a better chance of getting relief.
It is advisable to file Form 8857 as soon as possible after discovering tax issues. A recent report from the Treasury Inspector General for Tax Administration finds that it can take as long as a year and a half for processing.
Innocent spouses should keep in mind that cooperation and transparency during the application process can significantly improve their chances of success. Additionally, seeking professional advice or assistance can further enhance the likelihood of a favorable outcome.