Innocent Spouse Relief: When a Spouse Cheats (on Taxes)

By Stephanie Rabiner, Esq. on June 28, 2011 | Last updated on March 21, 2019

Innocent spouse relief has nothing to do with that kind of cheating.

No, instead it deals with tax cheats. That is, when your former or current spouse is a tax cheat unbeknownst to you.

So if the IRS is trying to get you to pay up on a tax liability that you had nothing to do with, read on. You may be entitled to innocent spouse relief under federal law.

When you're married and file a joint tax return, the IRS holds both you and your spouse jointly and severally liable for any liabilities and penalties that result from underreported income and unpaid taxes.

This means that, even in the event of a divorce or in the face of unequal income, you may be held individually liable for a situation that was created by your spouse.

The same goes for couples who file separately but live in a community property state.

To obtain innocent spouse relief, you must demonstrate that you did not know and had no reason to know that your spouse understated your tax liability or that your taxes were unpaid.

Having "no reason to know" is particularly important, as it generally refers to willful ignorance. If you chose to ignore an underreporting, or you should have been suspicious about your reported income given your financial situation, you may still be held liable.

There are also other factors that come into play when discussing innocent spouse relief, such as whether a party benefitted from the unpaid liability and whether a spouse signed the joint returns under duress.

In the end, innocent spouse relief really depends on your unique situation, so it's important to talk to a tax attorney to see if you should apply.

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