FAQ on Innocent Spouse and Equitable Relief: Part I

No tax filing method is completely risk-free but innocent spouse is a great way to tackle outstanding tax debt. Taxes can be especially complicated for spouses, who must decide whether to file jointly or together.

Joint filing can be more convenient and cost-effective, but pitfalls abound. Chief among them? The potential for unfair penalties, should the other spouse make significant filing mistakes.

Thankfully, the IRS offers a few mitigation opportunities for taxpayers who feel they don’t deserve penalties for mistakes made by their partners.

Two of the most noteworthy? Innocent spouse and equitable relief. In this three-part blog series on IRS relief, we explain both methods in detail.

What is innocent spouse relief?

As its name implies, innocent spouse relief accounts for a partner’s limited role in (or understanding of) tax errors. Taxpayers approved for innocent spouse relief need not pay penalties based on tax mistakes made by their current or former partners.

What is equitable relief?

Many spouses do not qualify for innocent spouse relief, even when it’s clear that they’ve been compromised by careless partners. Thankfully, a viable alternative is available: equitable relief.

Available to those who are ineligible for several types of relief (such as an innocent spouse, separation of liability, or cases involving community property law), equitable relief also aims to remove unfair consequences for partners of taxpayers who’ve made significant errors.

One of the greatest distinctions between innocent spouse and equitable relief? The latter is available after making an understatement or underpayment. Meanwhile, innocent spouse relief is limited to situations involving unreported income or incorrect deductions.

What about taxes that don’t qualify for relief?

While both innocent spouse and equitable relief can limit your need to pay some penalties, you will still be responsible for tax obligations that do not qualify for relief. Depending on the situation, the IRS could potentially collect from either you or your partner.

Still confused about innocent spouse and equitable relief? The sooner you understand the differences between these programs, the better. Our team can provide valuable insight into your options for securing much-needed relief. Get in touch today to learn more.