Saving Taxes: The Cooperative But Innocent Spouse

Innocent spouse relief can provide an excellent remedy to allocate taxes between spouses. While the innocent spouse rules are not all that complex, the application of the rules can be. Part of the complexity comes from the varying motives of the parties. Spouses and former spouses can have a number of different motives for requesting…

Filing Jointly v. Separately: Impact on Innocent Spouse Relief

There are a number of factors those who are married have to consider when deciding on their tax filing status. If you were to search for information about the difference between filing jointly v. separately (or mfj vs mfs), you would likely find articles that explain the mathematical calculation. They explain which tax deductions and…

Factors Showing Innocent Spouse Relief

Factors Showing Innocent Spouse Relief

The IRS has wide discretion in how it administers our tax laws. This discretion is power in its purest sense. This power can be wielded to destroy hard-won reputations, careers, and fortunes and it can even cost individuals their freedom. These powers can come from ambiguities in our laws. They can come from restrictions in…

Tax Refunds for Equitable Innocent Spouse Relief

Tax Litigation When The Administrative Process Failed

Innocent spouse relief can provide a remedy for spouses who file joint tax returns. This relief is particularly useful if the innocent spouse can obtain a tax refund for amounts previously paid. But not all innocent spouse requests can result in refunds. One has to be careful what they ask for. The Henry v. Commissioner,…

Does an IRS Appeals Protest Count as a Refund Claim?

Raising A Tax Issue For The First Time In Court

Taxpayers generally have to submit refund claims to recoup taxes paid to the IRS. The law generally says that these claims have to be in writing, but not necessarily on the IRS’s official forms. Taxpayers submit a number of documents to the IRS. Written protests submitted to the IRS are an example. Can such a…

Innocent Spouse Relief for One’s Own Income

Retaining Rights With A Charitable Conservation Easement

While taxpayers are often aware that innocent spouse relief can eliminate their liability for tax on items of income earned by their spouse (or ex-spouse), fewer taxpayers realize that innocent spouse relief can also help with tax on income they earned themselves. The recent Heydon-Grauss v. Commissioner, T.C. Memo. 2018-209, case provides an opportunity to…

Tax Court Expands Innocent Spouse Relief for Divorced Taxpayers

Tax Court Expands Innocent Spouse Relief For Divorced Taxpayers

Innocent spouse relief can allow a taxpayer to avoid joint liability for taxes that arose during the marriage. There is an exception for the would-be innocent spouse if they had actual knowledge of the item that resulted in the tax. The U.S. Tax Court addressed this limitation in McDonald v. Commissioner, T.C. Summary Opinion 2016-79,…

Innocent Spouse Relief Granted Despite Knowledge of Error on Return

Truck Driver Not Entitled To Deduct Meal And Supply Expenses

Innocent spouse tax relief can provide a remedy for spouses who are liable for taxes reported on a jointly filed income tax return.  It is an equitable remedy.  But is it available if the tax is due to an obvious error on the tax returns that the spouses both signed?  The court addressed this in Denton…

Refunds After Innocent Spouse Relief Granted

Irs Recognizes Employee Tool And Equipment Plans

If a taxpayer pays the couple’s income taxes and is then granted innocent spouse relief for the liability, is the innocent spouse entitled to a refund of the amount paid?  The 9th Circuit Court of Appeals addressed this in Orlock v. Commissioner. Facts & Procedural History The IRS granted the wife innocent spouse relief. Prior to…

Tax Disputes Involving Alimony Payments

Irs Recognizes Employee Tool And Equipment Plans

If payments qualify as alimony pursuant to federal tax law, the payments may be tax deductible by the payor spouse and included in gross income to the payee spouse.  The opposite is true if the amounts are not alimony for federal tax law.  Whether an expense counts as alimony is frequently the subject of disputes…