Married couples filing joint returns are allowed to claim higher deductions and several credits not available to other filing status filers. These married couples filing jointly may even include cross-border couples such as a U.S. Spouse and a foreign spouse. However, those benefits come at a price. Filing a joint return means that each spouse is jointly and severally liable for the full tax liability shown on the return for that tax year, not just their own share. This liability applies regardless of which spouse earned the income or caused any underpayment.
Additionally, the IRS can apply a couple’s joint tax refund toward one spouse’s past-due debts, such as child support, federal student loans, state income taxes, or certain other government obligations. If you did not know about your spouse’s debts when filing the joint return, you are generally not personally liable for those debts. The IRS can still offset the joint refund to satisfy the debt, but you may be eligible for relief to recover your share of the refund. You can request that the IRS allocate and release your portion of the joint refund.
Some people may want to amend a previously filed joint return and switch to Married Filing Separately (MFS) to limit their tax liability. However, once a joint return is filed for a given tax year, it is generally irrevocable after the original due date typically April 15). This change is only possible before the deadline. This means you likely cannot convert it to married filing separately later. Filing status, however, is decided fresh each year based on marital status as of December 31. So, while a couple likely can’t undo an already-filed joint return for that year or particular year, they can simply choose not to file jointly in future years.
As discussed above, spouses are jointly and severally liable; before continuing in more detail, let’s understand what joint and several liability means.
When you file a joint tax return, both spouses are subject to joint and several liability. This means the IRS can hold either spouse responsible for paying the entire tax, interest, and any applicable penalties for that tax year, not just their individual share. The liability applies even if only one spouse earned the income or caused the tax to be underpaid.
Thus, one spouse may be financially harmed due to their partner’s errors, omissions, unpaid taxes, or other improper actions on a joint tax return. Therefore, to protect the other spouse in this unfair situation, the IRS offers innocent spouse relief and injured spouse relief.
First, let’s understand the Innocent Spouse Relief.
Innocent spouse relief protects you from paying additional taxes or penalties resulting from your spouse’s unpaid taxes on employment and self-employment when you were unaware of them. It essentially tells the IRS: “I didn’t know about the error; it wasn’t my fault, so I shouldn’t have to pay for it.”
Innocent spouse relief may relieve a taxpayer of the burden of paying the unpaid additional tax bill caused by the other spouse’s errors. He or she needs to show no involvement in any wrongdoing and that he or she was unaware of the other spouse’s actions. However, the taxpayer remains responsible for taxes on their own income and items.
Let’s understand innocent spouse relief through a simple example.
For example, John and Sarah filed their taxes together. Sarah left out $80,000 she earned from freelance consulting work, and John did not know about it. Later, the IRS charged them a large tax bill for the unreported income and self-employment tax. If John can show that he was unaware of the missing income and did not benefit from it, he might qualify for innocent spouse relief. This means he would not have to pay the tax, penalties, or interest tied to Sarah’s unreported income. However, John would still need to pay any taxes he owes on his own income.
Next, let’s understand innocent spouse relief for spouses in which one is a U.S. citizen or resident and the other is a foreign national.
An international marriage is simply a marriage where the spouses have different nationalities, citizenships, or tax residencies. For example, a U.S. citizen or resident may be married to a Canadian citizen or a foreign national.
A foreign person can file as a U.S. resident for tax purposes by making a one-time election with their U.S. citizen or resident spouse under IRC § 6013(g).
They may then qualify for Innocent Spouse relief under IRC § 6015 if needed, just like on any other joint return. Jointly filing likely brings the foreign spouse’s worldwide income within the scope of the U.S. return.
For example, let’s say A and B are married couples. Here, A is a U.S. resident, and B is a foreign resident. A files a joint U.S. tax return, treating B as a U.S. resident for tax purposes.
While attending university, B took on part-time work after class hours and earned income from it. However, B never reported this income on their joint tax return, and A was unaware that B was working or earning this additional income.
When the IRS discovers the unreported income, both become jointly and severally liable. However, since A had no knowledge of B’s income, A can file for Innocent Spouse Relief. Under this relief, A may argue that the error was solely B’s fault and it would be unfair to hold A responsible.
In this case, A likely has a strong claim and may be relieved of liability specifically for the tax attributable to B’s erroneous items. A remains fully responsible for taxes on A’s own income, any correctly reported items, employment taxes, and similar obligations. The IRS does not relieve the requesting spouse of their own tax liability.
Innocent spouse relief can also help when a foreign spouse leaves the country, leaving the U.S. spouse to deal with the tax debt alone. Joint and several liability does not automatically end simply because one spouse leaves the country. However, the U.S. spouse can request relief by filing Form 8857, Request for Innocent Spouse Relief.
In the above example, if B leaves the country, leaving A to deal with the additional unpaid taxes attributable to B’s unreported income, then A may be able to claim relief. As discussed, A would need to demonstrate that he or she was unaware of B’s actions or the unreported income. Therefore, it would be inequitable to hold A liable for B’s portion of the tax debt.
An Innocent Spouse should generally file within 2 years of receiving an IRS notice of an audit or taxes due because of an error on your return.
Next, let’s explore whether innocent spouse relief extends beyond tax liability to claiming relief on FBAR-related penalties. FBAR is a mandatory disclosure filed by U.S. persons who hold foreign bank accounts exceeding $10,000 at any point during the year. Failure to file FBAR may result in significant penalties.
International taxpayers should note that innocent spouse relief does not cover FBAR penalties. The FBAR reporting requirement applies to U.S. persons with over $10,000 in foreign accounts. The FBAR rule is governed by the Bank Secrecy Act rather than tax law.
Since innocent spouse relief applies only to tax matters, it may not protect a spouse from FBAR penalties, even if the spouse was unaware of the accounts. As a result, a spouse may avoid income tax liability on undisclosed foreign accounts but still face significant FBAR penalties.
Whether a spouse has an FBAR filing obligation depends entirely on their own connection to the foreign account.
If the account isn’t in the spouse’s name and have no financial interest in it or signature authority over it, then likely have no FBAR filing obligation.
If the spouse jointly owns the account, or has signature authority over it, they may have their own independent FBAR filing requirement.
As a result, a spouse can qualify for innocent spouse relief from additional income tax on unreported foreign income. But they may remain liable for FBAR filing obligations if they were independently required to file an FBAR. Therefore, the innocent spouse relief cannot be used to provide relief from FBAR-related penalties.
Next, let’s understand the Injured Spouse Relief.
Injured spouse relief happens when the IRS takes your joint tax refund to pay your spouse’s old debts, like unpaid child support or student loans. If you file taxes together, the IRS might use the whole refund to cover the debt, even if most or all of the refund came from your own income or tax payments.
Therefore, you can file for injured spouse relief to recover your portion of that refund. Let’s understand injured spouse relief through a simple example.
Example: Sarah and John are married and file a joint tax return. They are expecting a $4,000 tax refund.
Sarah’s income and tax withholdings account for $3,200 of the refund. John’s part-time job accounts for the remaining $800.
John also owes $5,000 in unpaid child support from before the marriage. Because of that debt, the IRS applies the entire $4,000 refund to John’s child support.
Since most of the refund came from Sarah’s income, she can file Form 8379 (Injured Spouse Allocation) to claim her share of the refund.
An Injured Spouse should generally file Form 8379 within 3 years from the date the original joint return was filed or within 2 years from the date the tax was paid, whichever is later.
Next, let’s understand injured spouse relief for spouses in which one is a U.S. citizen or resident and the other is a foreign national.
An international marriage is simply a marriage where the spouses have different nationalities, citizenships, or tax residencies. For example, a U.S. citizen or resident may be married to a Canadian citizen or a foreign national.
A foreign person can file as a U.S. resident for tax purposes by making a one-time election with their U.S. citizen or resident spouse under IRC § 6013(g). This may often result in a larger tax refund than filing separately. However, if one spouse owes certain past-due debts, the IRS may use all or part of the joint refund to pay those debts. These debts can include unpaid federal or state taxes, child support, spousal support, state unemployment compensation debts, or other federal debts, such as student loans.
This can reduce or eliminate the joint refund. To recover their share of the refund, the non-liable (injured) spouse can file Form 8379, Injured Spouse Allocation.
Next, let’s understand how the injured spouse allocation works.
To recover their share of the refund, the non-liable spouse can file Form 8379, Injured Spouse Allocation. Under this form, the IRS determines how much of the refund belongs to each spouse. The IRS separates each spouse’s income, deductions, tax withholding, and most other tax items as if they had filed separate tax returns.
Some tax credits, however, are available only to couples filing jointly or are reduced when spouses file separate returns. In those cases, the IRS uses special allocation rules to determine each spouse’s share of the credit. Based on this calculation, the injured spouse receives the portion of the refund that belongs to them and is not used to pay the other spouse’s debts.
Next, let’s understand how state laws affect injured-spouse and innocent-spouse relief.
Both Injured Spouse Relief and Innocent Spouse Relief are federal IRS programs. However, state law can affect how the IRS applies these rules. It determines:
States generally follow one of two property systems:
For federal tax purposes, the IRS looks at where both spouses were domiciled during the tax year. A domicile is a person’s permanent home, which is the place they consider their main home and intend to return to. This determines whether community property laws or common law apply to their income and property.
Where you currently live or where you were married generally does not control this determination.
Next, let’s understand how state laws affect innocent spouse relief.
In most cases, Innocent Spouse Relief applies only if you filed a joint federal income tax return.
Community property law generally treats both spouses as entitled to one-half of the community’s income and expenses. This creates a unique problem. Even spouses who file separate returns can still be assessed tax on half of their spouse’s income, simply because of how community property is split.
To address this, the IRS extends relief under IRC §66 specifically to separate filers in these states. This relief allows a spouse to claim relief for tax on community income even if they did not file a joint return.
When reviewing your request, the IRS considers factors such as:
Although community property law may treat certain income as belonging to both spouses, the IRS does not automatically hold an innocent spouse liable simply because state law allocates the income equally.
Even if the IRS determines that you are not personally liable for your spouse’s tax debt, it may still be able to collect from certain community property. This can include assets such as a jointly owned home or a joint bank account, depending on state law. Although you may not owe the tax yourself, your spouse’s interest in community property may still be available to satisfy the debt. As a result, you may receive relief from personal liability while some shared property remains subject to IRS collection.
Next, let’s understand how state laws affect injured spouse relief.
Injured Spouse Relief allows you to recover your share of a joint tax refund when the IRS applies the refund to your spouse’s separate debt, such as:
How the IRS determines your share of the refund depends on state law.
In community property states, the IRS applies the state’s community property rules, which may affect how the refund is divided. Generally, income earned during the marriage is treated as belonging equally to both spouses, so the refund is often split closer to 50/50.
Let’s understand it through a simple example.
For example, suppose you earned $60,000, and your spouse earned $40,000 while living in a community property state.
Under community property laws, most income earned during the marriage is generally treated as belonging equally to both spouses. As a result, the IRS may treat some or all of the tax withheld from your wages as community property.
When calculating an injured spouse refund, the IRS allocates income, withholding, and other tax items under federal rules, including applicable community property laws. This means you may receive less of the refund than expected, even if more tax was withheld from your paycheck.
Next, let’s understand how state laws affect both innocent and injured spouse relief when the spouse moves between different states or different countries.
The spouse’s domicile during the tax year is important because it determines whether common law or community property laws apply.
If you and your spouse move from one state to another, your marriage remains valid, but the property rules that apply to your income may change depending on where you were domiciled during that tax year.
The same principle applies to international marriages. The IRS generally recognizes a marriage that was legally valid where it was performed, whether in the United States or another country. However, the country where you were married does not determine whether community property or common law rules apply.
Instead, the IRS looks at where you and your spouse were domiciled during the tax year. For example, a couple who married in India but established their permanent home in California during the tax year likely be subject to California’s community property rules. If they were domiciled in a common-law state, such as New York or Florida, community property rules generally would not apply, even if the marriage occurred abroad.
If one spouse lives in another country, or the couple has ties to more than one country, determining their domicile may require a closer look at the facts. Domicile isn’t the same as citizenship. It’s where someone considers their permanent home and plans to return to. In these cases, the IRS looks at factors such as where they own or rent a home, where they’re registered to vote, where their ID or driver’s license is from, and where they intend to settle long-term to determine which state’s rules apply for that tax year.
The IRS frequently turns down both Innocent Spouse Relief (Form 8857) and Injured Spouse claims (Form 8379). Below are the most common reasons for each.
Why the IRS may deny Innocent Spouse Relief?
The IRS may deny Innocent Spouse Relief for several reasons, which are as follows:
Why the IRS may deny Injured Spouse Relief?
The IRS may deny Injured Spouse Relief for several reasons, which are as follows:
Next, let’s understand the differences between Injured Spouse Relief and Innocent Spouse Relief.
| Injured Spouse Relief | Innocent Spouse Relief | |
| What Is It For? | Injured Spouse Relief is to recover your share of a joint tax refund that the IRS used to pay your spouse’s separate debt. | Innocent Spouse Relief is to claim relief from paying additional tax, penalties, and interest caused by your spouse’s errors on a joint tax return. |
| What Happened? | You filed a joint tax return, but the IRS applied all or part of your refund to pay your spouse’s separate debt. | The IRS determined that a joint tax return understated the employment or self-employment tax owed because of your spouse’s income, deductions, credits, or other tax items. |
| IRS Action | The IRS kept the refund. | The IRS sends a bill. |
| What Kind of Debt? | Past-due federal tax, state income tax, state unemployment compensation debts, child support, and certain federal non-tax debts. | Additional federal income tax resulting from unreported income, improper deductions or credits, self-employment income, or other errors on a joint return. |
| Which Form? | Form 8379 | Form 8857 |
| Does a Tax Lien Come Up? | Likely, no. This is because the IRS has already recovered the amount by applying the joint refund to your spouse’s separate debt. Because there is no unpaid tax owed by the injured spouse, it does not usually result in a federal tax lien. Instead, the dispute concerns how the joint refund should be divided between the spouses. Any federal tax lien already filed against the debtor spouse remains unaffected by Form 8379. | Likely, yes. This is because both spouses are generally liable for the unpaid tax. So, the IRS may file a federal tax lien if the liability remains unpaid. Therefore, a lien can attach because of the joint unpaid liability. If relief is granted, the lien may be released/withdrawn as it applies to the innocent spouse’s separate property. But the lien can remain valid against the other spouse and against jointly-held property. This depends heavily on how title is held and on state law. |
Issuing of Notice of Deficiency
| Likely, no. The IRS will likely not issue a Notice of Deficiency It does not involve determining whether additional tax is owed. Instead, it determines how a joint tax refund should be allocated between the spouses. Because no additional tax is being assessed, the IRS generally does not issue a Notice of Deficiency. A Notice of Deficiency is typically issued when the IRS proposes additional income tax, not when it offsets a joint refund. | Likely, yes. The IRS will likely issue a Notice of Deficiency. Here, the IRS is likely to issue you a notice of deficiency after determining that additional tax is due. |
| Can I Go to U.S. Tax Court? | Likely, no. There’s no formal notice of deficiency saying you owe more tax, so there’s nothing for Tax Court to review. If the IRS denies your claim, you usually resolve the dispute through the IRS or by filing a refund lawsuit in either the U.S. District Court or the U.S. Court of Federal Claims. | Likely, yes. Here, the IRS is likely to issue you a notice of deficiency that can be challenged before a U.S. Tax Court. However, Innocent Spouse Relief does not always require a Notice of Deficiency. A taxpayer may request relief under Form 8857, and if the IRS denies the request, the taxpayer may petition the United States Tax Court for review. This is an exception to the general rule because the Tax Court has specific authority to review innocent spouse relief determinations, even without a Notice of Deficiency. |
| What About Interest? | If the IRS approves an Injured Spouse Relief claim, the injured spouse generally receives their share of the refund, including any applicable overpayment interest. The interest represents the amount that would have been paid on the spouse’s share of the refund if the refund had not been applied to the other spouse’s debt. Injured Spouse Relief does not create additional interest. Instead, it restores the spouse’s share of the refund, including any interest that would have otherwise applied. | The IRS generally does not pay interest to a spouse who receives Innocent Spouse Relief because the relief reduces or eliminates an unpaid tax liability. In simple terms, the taxpayer has not paid any tax, so no interest is earned. If relief is granted, the spouse does not have to pay the interest on the additional tax covered by the relief. However, interest related to any remaining tax liability of the other spouse may continue to apply. |
| How Do Community Property Rules Affect the Relief? | In community property states, income earned during marriage is generally treated as belonging equally to both spouses. If you live in a community property state, the IRS may treat some income and tax withheld from your pay as belonging to both spouses. This may affect how much of the refund you can receive through Injured Spouse Relief. | In community property states, income earned during marriage is generally treated as belonging equally to both spouses. If you live in a community property state, the IRS may grant you relief even if you file separate returns. This is because the IRS may not hold a spouse responsible for tax on community income if the other spouse failed to report the income. Here, the innocent spouse did not know and had no reason to know about it, and holding the innocent spouse responsible would be unfair. |
| What If My Spouse Is From Another Country? | Injured spouse relief may still be available even if one spouse is a foreign national or nonresident alien, as long as the couple filed a joint U.S. tax return and the IRS used the joint refund to pay the other spouse’s qualifying debt. International issues, such as delays in getting an Individual Taxpayer Identification Number (ITIN), foreign addresses, or community property rules, may delay the processing of your Injured Spouse Relief claim. This may affect how the IRS divides your tax refund. The Treasury Offset Program applies only to certain U.S. federal and state debts and generally does not offset refunds to satisfy debts owed to foreign governments or private foreign creditors. | Innocent spouse relief may still be available even if one spouse is a foreign national or nonresident alien, as long as the couple filed a joint U.S. tax return. When deciding whether to grant relief, the IRS looks at each person’s situation. For example, if a spouse is from another country, the IRS may consider whether they understood the U.S. tax system, had difficulty with English, or relied on the other spouse to handle the taxes. These factors do not guarantee relief, but they may help support the request. For example, in Giorgio v. Commissioner, the Tax Court granted relief after considering that the spouse was born and raised outside the United States and English was not her first language. |
If you believe you are being held liable for a jointly filed tax return as a result of the wrongdoing of a spouse, you should speak to a tax professional as soon as possible. United States tax treaties generally do not directly address innocent/injured spouse relief. They focus on residency, double taxation, information exchange, and related matters.
Before requesting Innocent or Injured spouse relief, consider answering the following question:
Every spouse relief case depends on the specific facts.
Please contact Arora Law PC today to ensure you present the strongest possible case to the IRS.