Often in divorce we rarely consider the possible consequences of filing joint returns. Maybe when you signed tax returns, you may have not been privy to certain information. Perhaps the former spouse underreported income, or claimed false deductions unbeknownst to you. After your divorce you started receiving notices from the IRS for joint tax returns. Although you had no knowledge, the IRS can enforce collections from both parties involved. In such a case, you may want to apply for innocent spouse relief if your former spouse understated taxes while you were both married. Understatement of taxes is derived from underreporting income, or false deductions or credits.
To qualify you must meet all the following conditions:
- A joint return must have been filed with understated tax attributed to the spouse.
- You must be able to prove at the time you filed the return- you had no knowledge of the understatement of tax.
- Based on the facts, to hold you accountable would be unjust.
- You must be divorced from spouse.
The good news is the IRS has recently eliminated its two year time limit to apply for Innocent Spouse Relief.