When the IRS says that a jointly-filed tax return was erroneous or understated the tax owed, both you and your spouse may be responsible. The IRS can hold each of you liable for the unpaid tax unless you can demonstrate that you are an innocent spouse. To do so, you must complete and file Form 8857, Request for Innocent Spouse Relief.
What You Need to Include About Your Financial Situation When Requesting Innocent Spouse Relief
When completing Form 8857, the IRS will ask you to provide certain information about your current financial information. This information includes the following:
- A description of your property. Real estate, cars, stocks, and bonds are all examples of property that must be listed for the IRS. You must provide the fair market value of each item, as well as the balance of any outstanding loans used to acquire those items. Fair market value is determined as outlined by the IRS in the instructions for the form.
- The amount of cash that you have on hand and in your bank accounts.
- The number of adults and children currently in your household.
- Your monthly income, including any gifts received by friends or family, your wages, pensions, unemployment income, social security benefits, government assistance, alimony, child support, self-employment income, rental income, interest and dividends, and all other income. Examples of “other income” may include disability benefits and gambling winnings.
- Your monthly expenses, including expenses that are paid with income received from gifts. Categories of expenses that must be listed include food and personal care, transportation, housing and utilities, medical expenses, and other costs. These additional expenses may include child and dependent care, caregiver expenses, income tax withholdings, estimated tax payments, retirement contributions, union dues, unpaid state taxes, student loans, and court ordered payments.
The IRS needs this information because your current financial situation is considered when evaluating your request for innocent spouse relief.
If you owe taxes to the IRS, innocent spouse relief is just one potential solution to your problem. To get started learning more about tax issues, we encourage you to check out our free guide, The Ultimate Guide for IRS Problems.