Don't Mess With Taxes

Relationships, even in the best of circumstances, are hard. When one partner is abusive, then things get untenable.

October is Domestic Violence Awareness Month. During this month, the National Coalition Against Domestic Violence (NCADV) and similar groups are highlighting the victims and survivors, their children and families, their friends and family and their communities that are impacted by domestic violence.

More importantly, these organizations are providing assistance and counseling to those in abusive relationships and looking for ways to leave them.

Financial as well as physical abuse: While most of us immediately think of physical harm when we hear of domestic violence, that's just one form of abuse. It also can be financial.

The spouse or partner who makes the most money uses that resource to further trap the victim. An abuser often limits the victim's access to money, doling out just enough so that the abused partner can barely make do in daily life.

The lack of financial resources is a major reason why domestic abuse survivors stay with a violent partner or return to the dangerous relationship.

Shared marital tax responsibilities: Financial abuse also can extend to tax filings.

That's why the Internal Revenue Service takes abuse into account when considering innocent and injured spouse claims.

When a married couple files a joint return, they face joint and several liability for any due taxes. This tax law means that the IRS can come after either spouse for payment of a tax bill.

So the husband who simply signed the 1040 is just as responsible for what is owed Uncle Sam as the wife, who was the one who filled out all the forms all on her own.

That means even the spouse who might be in more dire financial circumstances than the one who fudged completed the 1040 must come up with a way to foot the bill if the truly offending spouse defaults and IRS demands the payment.

Think about that before you sign your next joint 1040. Also be sure to look it over closely before you affix your signature.

If you do find yourself in a tax mess because of a spouse's filing shenanigans, you might qualify for innocent or injured spouse relief.

These are two difference options, with some specific requirements and guidelines.

Innocent tax spouse circumstances: Generally, an innocent spouse is one who filed a joint return, but was unaware that his or her husband or wife deliberately under-reported their shared tax liability. This status is requested by filing Form 8857, Request for Innocent Spouse Relief, separately from the tax return in question.

Here, you let the IRS know how and why you believe only your spouse or former spouse should be held liable for the tax bill in question. If granted, the innocent spouse can be relieved of responsibility for paying tax, interest and penalties if a spouse or ex-spouse improperly reported items or omitted items on the joint tax return. Generally, the tax, interest, and penalties that qualify for relief can only be collected from your spouse or ex.

Note that you cannot electronically file an innocent spouse request. You must snail mail Form 8857 to:

Internal Revenue Service
P.O. Box 120053
Covington, KY 41012

Or, if using a private delivery service, send it to:

Internal Revenue Service
7940 Kentucky Drive, Stop 840F
Florence, KY 41042

You also may fax (yep, the IRS still uses this method) the form and attachments to the IRS at (855) 233-8558.

The IRS has a special online page with more on innocent spouse tax relief.

Injured tax spouse circumstances: You might, on the other hand, be an injured spouse if you file a joint tax return and all or part of your portion of a tax over payment is not refunded.

Instead, most or all of the tax money you expected to get back goes to cover your spouse's legally enforceable past-due federal or state tax bills, delinquent child or spousal support payments or other federal nontax debt, such as a student loan.

As an injured spouse, you might be able to get back your portion of the refund instead of having it go to pay for your deadbeat partner's legally required payments.

In this case, you need to file Form 8379, Injured Spouse Allocation, to get back your share of the joint refund.

File Form 8379, which can be done electronically, as soon as you learn that all or part of your share of tax overpayment was, or is expected to offset your spouse's legally enforceable past-due obligations.

You must file Form 8379 for each year that the injured spouse circumstances apply. You can file it with your joint tax return or amended joint tax return (Form 1040X), or you can file it afterwards by itself.

You also must file the form within three years from the due date of the original return (including extensions) or within two years from the date that you paid the tax that was later offset, whichever is later.

The bottom line is that an innocent spouse is married to someone who, on the couple's joint tax return, deliberately lied to the IRS to lower their tax bill. The innocent spouse had no idea this tax cheating was happening and Uncle Sam agrees that the in-the-dark partner shouldn't be held fully accountable for such spousal tax actions.

An injured spouse, on the other hand, is a wife or husband whom the IRS determines is not legally obligated to cover via tax overpayments the debts of his or her spouse.

IRS efforts against spousal abuse: While filing for innocent or injured spouse relief works for many partners, for some it creates domestic abuse dangers.

In these cases, the IRS has taken steps to help protect potential abuse victims.

When a taxpayer files Form 8857, Request for Innocent Spouse Relief, the agency wants the worried filer to check the box in Part II of the form (line 10). It asks, "Is there any information you are afraid to provide on this form, but are willing to discuss?"

Checking this box will tell the IRS that the relief seeking filer has been an abuse victim and fears that innocent spouse consideration could produce retaliation.

The 8857 form also asks in Part V for additional information on the abusive situation that might have played a part in the tax situation.

Click form excerpt above to download PDF of the full Form 8857. You also can read more about spousal abuse tax situations in the form's instructions.

The form's instructions also cite a 2013 IRS revenue procedure that discusses how the IRS agency will take into account abuse and financial control by the innocent spouse's husband or wife in determining whether equitable relief is warranted. It also broadens the availability of refunds in cases involving deficiencies.

There's also a special IRS web page with more on the rights of taxpayers who are victims of domestic abuse.

Abusive spouse must be notified: One continuing concern by spouses seeking tax relief is that under current law, the IRS must notify the spouse (or ex) with whom the 1040 in question was filed when there's a request for relief by the other partner.

"There are no exceptions, even for victims of spousal abuse or domestic violence. We will inform your spouse or former spouse that you filed Form 8857 and will allow him or her to participate in the process. If you are requesting relief from joint and several liability on a joint return, the IRS must also inform him or her of its preliminary and final determinations regarding your requested relief."

However, the agency says it will keep your personal identifying information confidential.

"To protect your privacy, the IRS will not disclose your personal information (such as your current name, address, phone number(s), or information about your employer, your income, or your assets)."

But any other information you provide the IRS to help it decide on an innocent spouse request could be disclosed to the spouse or ex-spouse. In this case, the IRS says you should redact or black out personal information in the material you submit.

The IRS also tells filers of Form 8857 on the document itself (emphasis is by the IRS) that, "If you have concerns about your safety, please consider contacting the 24-Hour (Confidential) National Domestic Violence Hotline at 1-800-799-SAFE (7233), or 1-800-787-3224 (TTY), or 1-855-812-1001 (Video Phone Only for Deaf Callers) before you file this form."

Get marital and financial help: I hope your marriage is a happy and solid one and the you never have to file for relief as an innocent or injured spouse.

I'm not a marriage counselor, but I have been wed to the hubby for many decades and I quickly learned that talking about issues, money and tax included, is something that's better done before, not after, any financial moves or tax filings are made.

I hope even more that you never suffer financial or physical abuse in any relationship. But if you do, please, please, please get help as soon as you can.

You also might find these marriage related posts of interest:

• Wedding and other tax tips for June
• 6 tax tips for divorcing (or divorced) couples
• 6 signs married couples should consider separate tax returns

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