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IRS Innocent Spouse

Top NYC CPA Firm · Best Rated Accountants in New York City

IRS Innocent Spouse

When you discover that your spouse owes a financial debt to the government, it can come as a surprise, especially if you’ve recently separated or divorced — or just married with no knowledge of your new partner’s existing debt. You may consider yourself an innocent spouse if, on a joint return, your spouse or former spouse withheld or incorrectly reported financial information such as:

  • Back taxes from either Federal or state returns
  • Child support
  • Alimony
  • Interest
  • Other unpaid payments

When you claim to have no knowledge of a spouse’s debt; you’re considered an innocent spouse and can request the IRS not hold you liable. Miller & Company LLP, NY Certified Public Accountants, a best rated NYC CPA firm.

Unfortunately, the IRS includes you when assigning responsibility for the debt because your signature is on the joint tax return. If you are innocent, you have to apply to the IRS to be recognized as an innocent spouse. This is another excellent reason to have a tax audit before submitting a tax return to the IRS. An accounting firm in NYC like Miller & Company thoroughly checks the return for errors and omissions during the audit.

Don’t confuse “innocent spouse” with “injured spouse.” An injured spouse is one who’s been informed that their tax refund is being seized and applied to their spouse’s or former spouse’s debt. An injured spouse seeks redress, whereas IRS innocent spouse application seeks to intervene before a tax refund is awarded or liability for the debt is assigned.

Filing for IRS Innocent Spouse Relief

The government has strict guidelines regarding IRS innocent spouse relief in NYC, so it’s not easy to successfully petition the IRS for it. To separate yourself from your spouse’s or former spouse’s debt, you need to file the correct form (Form 8857) — or multiple forms, if your claim covers more than six years.

A competent tax accountant can help you complete the forms. By looking at the big picture, Miller & Company CPAs with locations in NYC and Queens work to protect you and your finances. They make sure you meet all the following innocent spouse relief requirements, assuming you’ve already filed a joint return with your spouse or former spouse that you found out was incorrect or incomplete:

  • You can list your spouse’s erroneous issues on your application for IRS innocent spouse relief, such as your spouse’s deductions, credits and/or property basis that were misreported or omitted altogether.
  • You have proof that at the time you signed the joint return, you had absolutely no knowledge that taxes were reported incorrectly on your spouse’s portion of the tax return. You have to show that you had no reason to know or suspect that your spouse had falsified your joint tax return. This part is tricky because, as stated on the return itself, you’re supposed to check every portion of the return before signing it. If you had done so, you may have caught the errors.
  • There’s no evidence of a fraudulent scheme carried out by you, your spouse or former spouse and/or a third party to avoid a debt to the government.
  • You have to persuade the IRS why it’s unfair to hold you responsible for your spouse’s reporting. The IRS considers a whole range of evidence to determine this, including but not limited to: the nature of the error, your financial situation and whether you failed to ask questions before you signed the return.

In Cases of Abuse

You can and are encouraged to write a letter to go with your application. In the letter, you can explain the circumstances. One situation that has come to the fore in recent years is the acknowledgement of spousal abuse and intimidation, which may have caused you not to ask questions about the joint return. If this applies to you, state it in your letter of explanation. The IRS has become more sensitive to the needs of abused spouses and, when the time comes, the agency may allow you to present your case separately from your spouse or former spouse to avoid any chance of intimidation.

The IRS warns that they are required by law to notify your spouse or former spouse of your claim. They won’t reveal your current contact information unless you end up going to court. At that point, all of your personal information is available on the court documents. If abuse is an issue, consider alternatives to innocent spouse claims to protect yourself both physically and financially. Consulting with the experts, best rated CPA in NYC at Miller & Company located in NYC and Queens can determine the best action to protect both you and your money.

Time Constraints

Originally, filing for IRS innocent spouse relief was required within two years of the IRS’s contact with you requesting payment. While your deadline may still be two years, their deadline is now ten years for collecting on debts or mistakes they find. In light of this, they’ve been working to extend all deadlines so that the agency and you have the same amount of time to make claims.

In general, don’t delay in filing for IRS innocent spouse relief. Do it as soon as you discover the problem or when the IRS contacts you. The following are exceptions to the two-year deadline:

  • Balance due. If your spouse or former spouse has a balance and you’ve just been notified of the IRS’s impending collection actions, you have ten years from the notification to file your IRS innocent spouse claim.
  • Credit or refund. If you’re seeking a credit or refund for funds that you paid or for money that was taken from your federal tax return to pay on your spouse’s debt, you have three years from when you filed the return in question or two years from the date you paid the balance. The IRS gives you whichever is later in this instance.
  • Both a balance due and a credit or refund. In this case, you’re held to both time limits. You have ten years to file an innocent spouse claim for any balances your spouse might owe that are also in your name. If you have a credit or refund, you still have to file within three years of the tax return filing or within two years of the debt being paid.

If you’re denied IRS innocent spouse relief, you can re-apply at a later date, especially if there’s new evidence to support your claim. You don’t have the right to a day in court the second time around, but the IRS considers your application. If you’re struggling with how to protect yourself financially from your spouse or former spouse, contact NYC CPA at Miller & Company for help.

Do you have questions about services we offer including IRS Innocent Spouse in NYC and Long Island? Would you like to receive a personal IRS Innocent Spouse consultation customized to your specific needs? To schedule an appointment with a nationally recognized, best rated CPA in NYC, Paul Miller of Miller & Company LLP firm, please contact our Long Island or NYC tax accountants for a FREE CPA consultation.

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