Advising the Individual Taxpayer

Maria Delgado filed a joint return with her former husband. He had understated income from a side business, and Maria can show she did not know and had no reason to know of the understatement when she signed. She is still legally married to him and they live in the same household. Which form of spousal relief is designed for a taxpayer in Maria's circumstances?

• AInnocent spouse relief, available where an understatement is attributable to the other spouse and the requesting spouse did not know and had no reason to know of itcheck_circle Correct
• BSeparation of liability relief, which allocates the understatement between the spouses as if they had filed separately
• CInjured spouse relief, which returns the requesting spouse's share of a joint refund applied to the other spouse's separate debt
• DEquitable relief, the discretionary fallback that becomes the only avenue once both the knowledge test and the marital-status requirements have failed

Why A is correct: Section 6015(b) innocent spouse relief fits exactly: there is an understatement attributable to the other spouse's erroneous item, the requesting spouse did not know and had no reason to know of it, and it would be inequitable to hold her liable; marital status and household are not bars to this branch.

Why B is wrong: Separation of liability under Section 6015(c) requires that the requesting spouse be divorced, legally separated, widowed, or living apart from the other spouse for the 12 months before the request; because Maria remains married and in the same household, she does not qualify for this branch.

Why C is wrong: Injured spouse relief, claimed on Form 8379, addresses a refund offset for a spouse's separate past-due obligation such as child support; it does not relieve a spouse of liability for an understatement of tax and so does not address Maria's situation.

Why D is wrong: Equitable relief under Section 6015(f) is a discretionary fallback available only when relief is not available under the other two branches; because Maria satisfies the innocent spouse knowledge test, she qualifies under that branch and need not rely on equitable relief.