Married couples share their income and resources, so they often file joint tax returns. Frequently, one spouse prepares the tax return with minimal involvement on the part of the other spouse. They simply sign the document and trust that everything is accurate.
They may later learn that their spouse misrepresented their finances or underpaid their taxes substantially. In such cases, the person who was not aware of the tax issues might be eligible for innocent spouse relief or injured spouse relief.
What is the difference between injured and innocent spouses?
Innocent spouse relief is available for individuals facing Internal Revenue Service (IRS) tax controversies. When there are issues with the underpayment of federal taxes, those who are unaware of financial misrepresentation or fraud can ask the IRS to exempt them from the consequences of the tax controversy.
Injured spouse relief is similar, but it is available to those facing tax controversies at the state level in Indiana when the Indiana Department of Revenue identifies income tax issues. Both options require formal communication and potentially also legal assistance. While an attorney’s support is not technically mandatory, most people may struggle to understand the nuances of income tax law and the paperwork required to pursue innocent or injured spouse relief.
Consulting with a lawyer about an income tax controversy stemming from a joint tax return can be beneficial for spouses who are initially unaware of their income tax issues. Spouses may be eligible for relief at both the state and federal levels if they follow the appropriate procedures. With the right approach and paperwork, spouses who did not pair their tax returns may sometimes be able to avoid criminal and financial consequences.