Filing a joint tax return with your spouse can put you at serious financial risk. When you sign that return, you become jointly and severally liable for the entire tax bill—even if your spouse earned all the income, made all the tax decisions, or hid financial information from you.
If you’re facing tax liability because of your spouse’s actions, you’re not powerless. The IRS offers several forms of innocent spouse relief that can help you escape responsibility for taxes you shouldn’t have to pay. This comprehensive guide explains your four key options and how to determine which one might work for your situation.
What Is Joint and Several Liability?
When you file a joint tax return, both spouses become jointly and severally liable for the entire tax debt. This means the IRS can collect the full amount from either spouse, regardless of who earned the income or made the financial decisions that created the liability.
For example, if you owe $50,000 in taxes, the IRS can demand the full amount from you alone, your spouse alone, or any combination between you two. They typically pursue whichever spouse has more assets or income—often called having the “deepest pockets.”
This system can create serious injustice when one spouse:
- Hides income from the other
- Claims false deductions without their spouse’s knowledge
- Fails to pay taxes owed on their separate business income
- Engages in tax fraud or evasion
Fortunately, innocent spouse relief provisions can protect you from your spouse’s tax misconduct.
The Four Types of Innocent Spouse Relief
1. Traditional Innocent Spouse Relief (IRC Section 6015(b))
Best for: Situations where your spouse understated income or overstated deductions on your joint return without your knowledge.
Traditional innocent spouse relief offers complete protection from joint return liability, but you must meet five strict requirements:
The Five Requirements:
- Joint return filed – You must have filed a joint tax return with an understatement of tax
- Understatement exists – There must be a tax understatement due to your spouse’s erroneous items (usually discovered through an IRS audit or other IRS underreporting investigation)
- Lack of knowledge – You didn’t know and had no reason to know about the understatement when you signed the return
- Unfairness – It would be unfair to hold you liable considering all facts and circumstances
- Timely filing – You must request relief within two years of when the IRS begins collection activities
The Critical “Knowledge” Standard
The knowledge requirement is where most cases succeed or fail. The IRS examines two types of knowledge:
- Actual knowledge: You specifically knew about the unreported income or false deductions
- Reason to know: A reasonable person in your situation should have questioned the return
Red flags that suggest “reason to know” include:
- Unexplained increase in standard of living
- Your spouse being secretive about finances
- Obvious discrepancies on the tax return
- Large cash deposits or unusual financial activity
The IRS considers factors such as your education level, business experience, and involvement in family finances when determining if you had “reason to know.”
2. Separation of Liability Relief (IRC Section 6015(c))
Best for: Divorced or separated spouses who want their liability limited to their portion of the tax debt.
This option is often more favorable than traditional innocent spouse relief because it uses a stricter knowledge standard and provides predictable results.
Eligibility Requirements:
You must be:
- Divorced, OR
- Legally separated, OR
- Living apart from your spouse for at least 12 months before requesting relief
How It Works:
The IRS allocates the tax deficiency between you and your spouse based on what each person should have reported on separate returns. You’re only responsible for your portion of the understatement.
For example, if your joint return failed to report $30,000 of your spouse’s business income and $10,000 of your freelance income, you’d only be liable for the tax on your $10,000.
The “Actual Knowledge” Standard:
Unlike traditional innocent spouse relief, separation of liability only denies protection for items you had actual knowledge of—a much higher standard than “reason to know.” The IRS must prove you specifically knew about the erroneous items, not just that you should have known.
3. Equitable Relief (IRC Section 6015(f))
Best for: Cases that don’t qualify for other relief types, or situations involving underpayment (not just understatement) of taxes.
Equitable relief is your catch-all option when traditional innocent spouse relief or separation of liability don’t apply. It’s also the only option available for underpayments of tax (when your return was correct but taxes weren’t paid).
Key Factors the IRS Considers:
- Marital status – Divorce or separation favors relief
- Economic hardship – Your ability to pay the liability
- Knowledge – What you knew about the tax problems
- Significant benefit – Whether you benefited from the unpaid taxes
- Compliance history – Your tax compliance in subsequent years
- Abuse – History of spousal abuse (a strong factor favoring relief)
- Mental/physical health – Conditions affecting your ability to challenge the return
4. Injured Spouse Relief
Best for: Getting your portion of a tax refund back when it’s seized to pay your spouse’s separate debts.
Injured spouse relief is different from the other options—it’s not about escaping tax liability, but about recovering money that’s rightfully yours.
When Your Refund Can Be Seized:
The IRS can take your joint refund to pay your spouse’s:
- Past-due federal taxes from before marriage
- Past-due state income taxes
- Past-due child support obligations
- Past-due spousal support or alimony
- Defaulted federal student loans
- Other federal debts
Qualification Requirements:
- Not legally obligated – The debt must belong solely to your spouse
- Made tax payments – You must have made payments through withholding, estimated payments, or prior year overpayments
- Reported income or claimed credits – You must have contributed to the tax return through income, payments, or credits
How Your Portion Is Calculated:
The IRS determines your share based on:
- Your percentage of total income reported
- Your percentage of total withholding and payments
- Credits you’re eligible for individually
How to Request Innocent Spouse Relief
Forms to File:
- Form 8857: For traditional innocent spouse relief, separation of liability, and equitable relief
- Form 8379: For injured spouse relief only
Strategic Considerations
Timing Matters
- File for relief as soon as possible after discovering the problem
- For separation of liability, the timing of your separation can be strategically important
- Consider filing Form 8379 with your return if you know your spouse has debts
Consider Multiple Options
You may qualify for more than one type of relief. If one doesn’t work, another might provide partial protection.
Documentation Is Key
Start gathering evidence immediately. The stronger your documentation, the better your chances of success.
When to Seek Professional Help
Innocent spouse cases can be complex and high-stakes. Consider consulting with a tax professional who specializes in innocent spouse relief if:
- The tax liability is substantial
- Your spouse controlled all financial decisions
- You’re facing immediate collection action
- Your case involves domestic abuse
- You’ve been denied relief and want to appeal
Know Your Rights as a Taxpayer
You have rights, even when facing joint return liability. The IRS cannot automatically hold you responsible for your spouse’s tax misconduct. Understanding innocent spouse relief options is powerful protection against unfair tax situations you didn’t create or know about.
If you’re wondering whether you might qualify for innocent spouse relief, don’t wait. The earlier you act, the more options you’ll have available to protect yourself from joint tax liability.
If you need help evaluating your Innocent Spouse Case, contact Boss Tax Law today!