Innocent Spouse Relief vs Injured Spouse: What’s the Difference?

Joint and Several Liability

When a couple files a joint return, the IRS treats both spouses as responsible for the tax and any interest or penalties. According to the IRS, that remains true even if the couple later divorces, a divorce decree says the other spouse is responsible, or one spouse earned all of the income.

Innocent Spouse Relief (Form 8857)

Section 6015 provides three forms of relief, all requested on Form 8857, Request for Innocent Spouse Relief. The IRS considers all three when it reviews a request.

Innocent spouse relief

Under section 6015(b), a spouse can be relieved of liability for an understatement of tax if:

• a joint return was filed;
• the understatement is attributable to erroneous items of the other spouse, such as unreported income or incorrect deductions or credits;
• when signing the return, the requesting spouse did not know and had no reason to know of the understatement;
• considering all the facts and circumstances, it would be inequitable to hold the requesting spouse liable; and
• the request is made no later than two years after the IRS began collection activities against the requesting spouse.

If the requesting spouse knew of an item but not its extent, partial relief may be available.

Separation of liability

Under section 6015(c), a requesting spouse who is divorced or legally separated, or who was not a member of the same household as the other spouse at any time during the 12 months before the request, can elect to limit liability for a deficiency to the portion allocable to him or her. The requesting spouse generally bears the burden of establishing that allocation, and the election is invalid if assets were transferred between the spouses as part of a fraudulent scheme.

Equitable relief

Under section 6015(f), when relief is not available under the first two provisions and it would be inequitable to hold the requesting spouse liable, the IRS may grant relief from an understatement or from an unpaid tax shown on the return. A request for relief from an unpaid liability must be made before the collection period under section 6502 expires; a request involving amounts already paid must be made within the period for claiming a refund.

Other Points on Innocent Spouse Requests

• The IRS contacts the other spouse or former spouse and allows him or her to participate.
• According to the IRS, relief is not available for a year in which the requesting spouse signed an offer in compromise or a closing agreement covering the same taxes, a court made a final decision denying relief, or the requesting spouse participated in a related court proceeding without asking for relief.
• The IRS states that a victim of spousal abuse or domestic violence may qualify even if he or she knew about the errors, when fear prevented challenging the return.
• Generally, both spouses can appeal the IRS’s determination within 30 days of the determination letter, and Tax Court review is also available in many cases.

Injured Spouse Relief (Form 8379)

According to IRS Publication 971, a spouse is an injured spouse if his or her share of the overpayment shown on a joint return was, or is expected to be, applied against the other spouse’s legally enforceable past-due federal taxes, state income taxes, state unemployment compensation debts, child or spousal support payments, or a federal nontax debt such as a student loan. Relief is available when the requesting spouse filed jointly, the refund was applied to the other spouse’s debt, and the requesting spouse was not responsible for that debt.

For example, if a couple’s joint refund is applied to one spouse’s past-due child support from a prior relationship, the other spouse can file Form 8379, Injured Spouse Allocation, to request the portion of the refund attributable to his or her own income, withholding and payments.

Form 8379 can be filed with the joint return, by mail or electronically, or separately after the IRS or the Bureau of the Fiscal Service sends a notice of offset. According to the IRS, it must be filed within three years from the date the return was filed or two years from the date the tax was paid, whichever is later, and a separate Form 8379 is needed for each year. In community property states, including California, the IRS divides the refund based on state community property law.

Choosing the Right Remedy

• The IRS says you owe more tax on a joint return because of your spouse’s income or deductions: consider innocent spouse relief, separation of liability or equitable relief on Form 8857.
• Your share of a joint refund was applied to your spouse’s past-due taxes, support obligations or other debts: consider injured spouse relief on Form 8379.

The Bottom Line

Innocent spouse relief can remove or limit liability for tax on a joint return, subject to knowledge, fairness and timing requirements. Injured spouse relief recovers a spouse’s share of a joint refund applied to the other spouse’s separate debts. Identifying the right remedy, and acting within its deadline, is the first step.