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,…Continue readingTax Refunds for Equitable Innocent Spouse Relief
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…Continue readingDoes an IRS Appeals Protest Count as a Refund Claim?
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…Continue readingInnocent Spouse Relief for One’s Own Income
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,…Continue readingTax Court Expands Innocent Spouse Relief for Divorced Taxpayers
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…Continue readingInnocent Spouse Relief Granted Despite Knowledge of Error on Return
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…Continue readingRefunds After Innocent Spouse Relief Granted
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…Continue readingTax Disputes Involving Alimony Payments
Innocent spouse relief can provide a much needed remedy for divorced or separated taxpayers who filed a joint income tax return. This relief is commonly granted where the income that gave rise to the tax liability was earned by one spouse. The recent Mapp v. Commissioner, T.C. Summary Opinion 2008-76, case provides an opportunity to consider…Continue readingInnocent Spouse Relief for Ex-Spouse’s Income
If a divorce decree says that a payment to an ex-spouse, does that mean that it is alimony the ex-spouse has to report as income for Federal income tax purposes? And if not, can the ex-spouse who receives the payment request a ruling from the IRS to say that the payment was not taxable to…Continue readingCan One Spouse Cause IRS to void Other’s Alimony Deduction?
Can one spouse prevent the other spouse from obtaining innocent spouse relief by filing bankruptcy? The court addressed this question in Kovitch v. Commissioner, 128 T.C. 9 (2007). The Facts & Procedural History The Kovitch’s were divorced. The IRS then issued a notice of deficiency to both spouses for their joint tax liability. Only the wife…Continue readingBankruptcy Filing Does Not Prevent Innocent Spouse Relief
What if an ex-spouse who is jointly liable for the tax waits until after the other ex-spouse’s bankruptcy discharge and argues that the taxes were not discharged in bankruptcy as the tax return was invalid? The court addressed this in Kuhl v. United States, No.?05-6570-BK (2nd. Cir. 2006). Facts & Procedural History Ms. Kuhl owed the IRS…Continue readingEx-Spouse’s Defense for Tax Discharged in Bankruptcy