Innocent spouse rule Definition Bankrate.com Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content

Innocent spouse rule

Facing a tax conflict with your ex? The innocent spouse rule is a concept you need to understand. The Internal Revenue Service (IRS) usually holds that both signers of a joint tax return are individually liable for the entire tax due, plus penalties and interest. Under , a spouse may claim not to be jointly liable if he or she did not know about errors or erroneous items on a joint return.

Deeper definition

The innocent spouse rule is designed to protect a spouse and his or her assets from the ramifications of the other spouse’s misleading or erroneous tax filings. This rule is applicable for married, separated, or divorced spouses. To qualify for relief under the innocent spouse rule, all of the following qualifications must be met: One spouse filed a joint return that understated tax due because of an erroneous item or . The other spouse was unaware of this understatement when he or she signed the return. An analysis of the circumstances and evidence reveals that it would be unfair for the innocent spouse to pay the tax. The innocent spouse applied for the relief within two years of the initial IRS tax collection attempt. An erroneous item is qualified as anything misreported or knowingly misrepresented. The innocent spouse rule applies only to tax adjustments based on this type of error and does not apply to spousal failure to pay taxes that are due.

Innocent spouse rule example

Vladimir discovered that his spouse, Estragon, misrepresented their joint tax information, and the IRS is seeking payment stemming from this error. Vladimir wanted to invoke the innocent spouse rule, because he was not aware of the misrepresented tax information when he signed the filing. The court examined the circumstances and evidence, and found that while Vladimir truly had not known about Estragon’s misrepresentation, given the circumstances he certainly should have known about it (records presented in the case showed that Estragon and Vladimir had discussed issues related to the defect). In this case, Vladimir did not qualify for relief under the innocent spouse rule. Curious what you’ll owe next tax season? Use our to estimate your future taxes.

More From Bankrate

An LLC can simplify tax filing and reduce the legal liability of its members. How to lessen the tax liability, so you can keep as much profit in your pocket as possible. If you haven’t filed your taxes yet, don’t panic — but act fast. Typically, taxpayers have two options: Take the itemized deductions or take the standard deduction. Regardless of what may cause a person to miss the tax-filing deadline, there are potential consequences. Applying for more time to file your taxes is easy. Just don’t put off paying your tax bill. The fast-approaching deadline for filing your 2021 taxes is April 18, 2022. There are seven tax brackets for most ordinary income: 10%, 12%, 22%, 24%, 32%, 35% and 37%. The credit was confusing even before Congress revamped it for 2021.