Are You an “Innocent Spouse”?

Couples who are no longer together, but not yet divorced, can be quite upset when one finds out he/she is responsible for the tax burden of the other. Sometimes it can be a rude awakening when one person marries another only to find out that the new spouse has a huge tax burden that wasn’t revealed. These are situations that are covered under the “innocent spouse” provision. If one person of the couple truly had nothing to do with the tax burden of the other, a form can be filled out to allow the “innocent spouse” to collect the refund he/she would have been entitled to had he/she filed solo.

The IRS has proposed to extend for up to 10 years the amount of time that taxpayers would have to apply for the “innocent spouse” tax relief program.

It has released REG-132251-11, which proposes to expand from two to 10 years the amount of time that taxpayers could apply for innocent spouse relief so they are no longer responsible for the tax debts of estranged spouses.

The IRS said in 2011 that it would no longer require people to apply for innocent spouse relief within two years. In 2012, it expanded the relief to a greater number of taxpayers under newly proposed guidelines. The proposed regulations issued recently would make the 10-year deadline permanent. The innocent spouse relief would be retroactive to any requests filed on or after July 25, 2011.

If you think this provision may apply to your situation, it would be beneficial checking with a tax preparer. It’s not likely something you’d want to tackle on your own.

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