Injured Spouse vs. Innocent Spouse — What Is the Difference?
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Summary:
They sound similar but they are big differences to consider when comparing injured spouse vs innocent spouse relief. An injured spouse claim will avoid your tax refund from being used to pay your spouse’s debt. However, an innocent spouse claim may help you avoid tax liability when your spouse gets into trouble with the IRS and you filed a joint tax return.
Tax season is a stressful time for everyone, and the last thing you need is an unfair tax liability or to have your tax refund used to pay off someone else’s debt. So what can you do if your spouse improperly reported income on your joint income tax return? Or what if your spouse has defaulted on student loans, and the IRS is using the refund you expected for your joint return to pay off that debt?
There are two programs that help when you want to avoid tax debts or tax liability linked to your spouse: injured spouse and innocent spouse tax relief. Here is an in-depth review of how they differ and how to decide which one is the right move for you.
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Not your fault, not your responsibility
Is this one of those “for better or worse” moments you just have to live with? Fortunately, the answer is “no.” There are tax relief programs, such as the injured spouse relief and the innocent spouse relief that can help.
If you report your own income accurately, but your spouse reports income incorrectly, you don’t have to be held liable for your spouse’s false entry. If the incorrect value is solely attributable to your spouse, you can avoid liability by filing for innocent spouse relief. This ensures that you are not held liable for your spouse’s action. If your spouse has a debt that the IRS is going to use your tax refund to pay off, you can file an injured spouse claim. This helps you get back your portion of the tax refund.
Injured spouse claim vs. innocent spouse claim: what are they?
Injured spouse claims and innocent spouse claims only come into play if you file a joint tax return with your spouse. These claims ensure you are not held liable if your spouse makes fraudulent entries on a tax return or has debt that does not belong to you.
Injured spouse
If you file a joint tax return with a spouse who has a debt, the IRS may use your tax return to repay that debt. That is, the IRS may keep your refund to cover your spouse’s debt liability. That means a smaller (or no) refund when you do your return.
But what if you want to get the full refund you’re due (and pay only what you owe) and not help pay any of your spouse’s debt? You can file for injured spouse relief.
The IRS may use a tax return to collect any of the following:
- Unpaid child or spousal support.
- A defaulted student loan.
- Alimony.
- Federal government debt
So, if your spouse has any of these debts, be sure to file for injured spouse relief. This way, your share of any tax refund will be given to you and not used to pay off your spouse’s debt.
Examples of injured spouse relief in action
These two examples, hypothetical but true to life, should make injured spouse relief easier to understand.
Example 1
Nate and Kara file their taxes jointly. They expect a tax refund this year. However, Kara has defaulted on a student loan. The IRS contacts Nate and Kara and tells them that the refund will be used to pay off Kara’s student loan default. In this case, Nate can file for injured spouse relief because the default is not Nate’s. He may get his portion of the refund back.
Example 2
Amy and Cole are married. They file their taxes jointly. Cole has a child from a previous marriage and pays child support. Cole was late on his child support payments before he and Amy got married. The IRS takes both Amy and Cole’s tax refund to pay off Cole’s child support debt. Amy can seek injured spouse relief and get her portion of the tax refund back.
Side note: If you find out all you can about your partner’s debts, as well as credit issues, before getting married, you can prepare in advance for tax problems arising from outstanding liabilities. Sadly, there’s not much you can do to prepare for fraudulent and erroneous entries on joint filings.
Innocent spouse
You and your spouse filed taxes jointly. However, your spouse failed to report income or reported it inaccurately. Though you signed the tax return, you didn’t know about your spouse’s erroneous item or fraudulent activity. Since you didn’t know your spouse was lying or careless, you may be eligible for innocent spouse relief.
The innocent spouse relief program allows taxpayers to avoid the responsibility of paying tax, interest, and penalties caused by a spouse or former spouse who improperly reported items on a joint tax return.
It can take up to eight months to receive a determination when requesting innocent spouse relief due to a lack of resources. It’s easy to see why. According to a report by the Taxpayer Advocate Service, the IRS receives more than 47,000 requests for innocent spouse relief a year. However, there were only 140 employees working on these cases.
You can file for innocent spouse relief if your current or former spouse did any of the following on your taxes:
- Underreported income.
- Failed to report income.
- Claimed improper deductions or fraudulent dependents.
The IRS looks for these three conditions to determine if someone can qualify for innocent spouse relief:
- You are (or were) married and filed a joint return.
- Your spouse reported income improperly on the return.
- You can prove that you didn’t know the information was incorrect.
If you meet all these conditions, you should not be held liable for the unpaid taxes.
When can you file each type of claim?
An innocent spouse claim can be filed whether the joint return was filed with a current or former spouse. An injured spouse claim can only be filed for a joint return filed with your current spouse.
Examples of innocent spouse
Here are a couple of concrete examples to clarify things.
Example 1
Emily files a joint tax return with her husband, Alex. Alex is self-employed. The IRS contacts both Emily and Alex and informs them that they did not report income for Alex’s self-employment. Emily did not know there was a problem with the tax return. If she can prove this to the IRS, she can get innocent spouse relief. This will allow Emily to get a complete release of tax liability from Alex’s unreported income.
Example 2
Mitch and Megan filed a joint return but are now divorced. Mitch fraudulently claimed dependents on their tax return. The IRS contacts Mitch and Megan and informs them of this. Megan had no idea that Mitch was lying when she signed the tax return. She can apply for innocent spouse relief even though she and Mitch are divorced.
How to request innocent spouse relief
Receiving innocent spouse relief is a lengthy process. We will lay out the steps here, but keep this in mind: it will take some time before the IRS gets back to you.
Here are the steps to receive innocent spouse relief:
- As the innocent spouse, you file IRS form 8857.
- The IRS will contact your spouse (current or former) and get the other side of the story.
- If you prove your case, the IRS will grant you innocent spouse relief.
This means that innocent spouses will then only have to pay the portion of taxes attributed to their individual income. Only their guilty spouses will have to pay for the fraudulent behavior.
When should you submit your injured spouse claim? Ideally, you should submit your claim at the same time you file your tax return. Failing that, you can also apply when the IRS tells you it will use the tax refund to pay off your spouse’s debt.
How to request injured spouse relief
You should submit an injured spouse relief claim as soon as possible. This is very important. Like an innocent spouse relief claim, an injured spouse relief claim takes a lot of time. It’s a slow process. There is also a time limit on when you can apply for injured spouse relief.
You have to file for injured spouse relief:
- No later than three years after you file the original return or
- No later than two years from the date that the action was taken.
Here are the steps to receive injured spouse relief:
- As the injured spouse, you file IRS form 8379.
- The IRS will review the account.
- The IRS will separate your and your spouse’s tax liability. Each of you will be responsible for your own debt.
Who can help you file an injured spouse relief claim?
If you qualify for injured or innocent spouse relief, the task may seem confusing or overwhelming. But, there are people who can help you. Although you can do all this by yourself, you can also hire a tax relief professional to help you out. If you’re on a budget, check out some free tax help resources. This might help the process run smoother and easier.
If you have other tax problems or want to avoid problems by getting tax relief help, you can use SuperMoney’s advanced search tools to find tax relief and tax preparation companies.
FAQ
What qualifies as an injured spouse?
If your spouse owes a tax debt but you don’t and you are both liable for the debt, you are an injured spouse. Filing the right paperwork may allow you to get your full tax refund (or get it back if it’s already been seized).
What is the IRS innocent spouse rule?
The rule gives relief from paying tax, interest, or penalties due to an error (accidental or intentional) by the applicant’s current or former spouse on a joint income tax return.
Is it better to file injured spouse or married filing separately?
It is usually better to file jointly with an injured spouse claim. Filing separate returns means losing the advantages of filing jointly, which can be significant. Filing taxes together provides the best tax benefits, highest standard deduction, and lowest tax rate.
Should I file separately if my husband has debt?
It will be a lot less hassle to file separately until the debt is paid off. If you file together, be sure to also file form 8379.
Key takeaways
- When spouse A makes fraudulent entries on a tax return without spouse B’s knowledge, spouse B can file for innocent spouse relief.
- Innocent spouse relief applications can be filed for joint returns involving either a current or a former spouse.
- Injured spouse relief ensures your tax return does not go toward paying off your spouse’s debt.
- There is a time limit on when you can file an injured spouse claim.
CS
Camilla has a background in journalism and business communications. She specializes in writing complex information in understandable ways. She has written on a variety of topics including money, science, personal finance, politics, and more. Her work has been published in the HuffPost, KSL.com, Deseret News, and more.
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