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It is easy to understand why so many people confuse injured spouse relief and innocent spouse relief, but they are two very different things. Both are remedies that may be available to you if you filed a joint return with your spouse. Injured spouse relief allows you to your tax refund if it was applied toward your spouse’s tax liability or other debt. Innocent spouse relief can relieve you from liability for understatement of tax due by your spouse. An experienced tax attorney can explain which one applies to you and help you with either type of relief.
You can file for injured spouse relief, to receive a tax refund, if you filed jointly with your spouse and your share or part of your share of overpayment was applied to your spouse’s:
- Past federal tax liability
- State income tax
- Federal non-tax debt, such as student loans
- Child support
- Spousal support
Your ability to receive a refund based on an injured spouse claim will depend, in part, on the laws in your state. Special rules apply to calculation of your refund in community property states.
Innocent spouse relief is more complicated. When you are married and file jointly you are each liable for the entire tax amount, even if you divorce. You are liable for the tax liability, penalties and interest that was generated entirely from your spouse or ex’s income. You can seek innocent spouse relief from this liability under certain circumstances:
- The understatement of tax was due to an erroneous item or negligence on the part of your spouse
- You did not know or have reason to know about the tax understatement
- It would be unfair or unreasonable to hold you liable
You may be able to receive partial relief if you know about the understatement but did not know how large the understatement was. If you are not eligible for innocent spouse relief you may be eligible for other types of relief under the right circumstances. An experienced tax attorney can help you sort this out.
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