Separation of Liability Relief

Separation of liability requirements

If your situation doesn’t meet all the necessary guidelines for “classic” innocent spouse relief, you may qualify for another type of tax relief from the IRS called Separation of Liability. Under this form of tax relief, the underpayment of tax is separated between you and your former spouse. Separation of liability relief is available when spouses have divorced or separated after filing a joint return.

While relief under Innocent Spouse could be for the entire tax understatement and penalties and interest, separation of liability relief determines the liability of each spouse separately by allocating the income and deductions from the joint return to each spouse. In essence, amending a joint return into separate ones.

Separation of Liability Requirements

To qualify for separation of liability relief requires the following:

  • A joint income tax return must have been filed for the year in question;
  • At the time you file Form 8857, you and your spouse must be divorced ,or are legally separated, or have not been members of the same household during the prior 12 months;
  • Any relief will not apply to any portion of the tax understatement that is due to erroneous items about which you had actual knowledge; and,
  • There was not transfer of property to you for the main purpose of avoiding tax or payment of tax.

Even if you meet one of the requirements, the IRS still may not grant relief by separation of liability under certain circumstances. Dale O'Neal can help you determine if you qualify for this form of tax relief. Call him at 817-877-5995 now or request a consultation online to get started today.