Thursday, August 12, 2010

IRS Declares Spouses More Innocent Than Before

The innocent spouse rules have been liberalized in new tax legislation, making it easier for spouses to qualify for tax relief. In addition, the legislation allows a spouse to limit her liability on a joint return to her separate liability. This is a boon to separated spouses who continue to file joint returns with their spouses, and it offers greater protection to divorced spouses who face liability for taxes on returns they jointly filed during marriage.

The innocent spouse provisions provide tax relief to a spouse who jointly files with her husband (or vice versa) if there was a tax understatement attributable to her spouse and she did not know about the understatement when she signed the return, nor did she have reason to know of the tax understatement. If she knew there was an understatement but didn’t realize the extent of the understatement, she may be granted partial relief.

Under new Internal Revenue Code Sec. 6015, a spouse can now elect to limit her liability for unpaid taxes on a joint return to her separate liability amount. That amount is the tax on items that would have been allocated to her had she filed a separate return. There’s one catch though – any item of which the spouse had actual knowledge is allocable to both spouses. The good news is that the IRS must prove that she had knowledge of the misstatement or omission that caused the deficiency.
Ginita Wall

To read this article in its entirety, please click here.

For more information, contact the Family Law Offices of Renee M. Marcelle at (415) 456-4444, or online at

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