Innocent-Spouse Rule

AAA

DEFINITION of 'Innocent-Spouse Rule'

A measure of relief built into the tax code that allows a person, if eligible, to avoid paying his or her spouse's tax if it was reported incorrectly. The innocent-spouse rule applies to a spouse that can prove that he or she did not incur the tax bill and did not somehow benefit from the failure to pay.

Ultimately, this rule is designed to protect people from liability for taxes incurred as a result of evasive or dishonest financial behavior by their spouses, or from divorces where one person fails to pay tax on the income he or she earned and intends to leave the other spouse with the bill.

INVESTOPEDIA EXPLAINS 'Innocent-Spouse Rule'

Several conditions must be met in order for the innocent-spouse rule to apply. The innocent spouse must prove (with appropriate documentation) that the error or fraud was committed by the other spouse. The innocent spouse must also be able to establish that he or she didn't know about the income or fraudulent activity. Finally, the application for relief must be made within two years of when the IRS begins its collection process.

RELATED TERMS
  1. IRS Form 8379: Form 8379: Injured ...

    A tax form distributed by the Internal Revenue Service (IRS) ...
  2. Form 8857: Request For Innocent ...

    An IRS tax form used by taxpayers to request relief from a tax ...
  3. IRS Publication 971: Innocent Spouse ...

    A document published by the Internal Revenue Service (IRS) that ...
  4. Filing Status

    A category that defines the type of tax return form an individual ...
  5. Tax Fairness

    A tax platform based on an ideal that aims to create a system ...
  6. Married Filing Jointly

    A filing status for married couples that have wed before the ...
Related Articles
  1. Taxes

    10 Steps To Tax Preparation

    Follow these simple steps to get you ready for the income tax deadline of April 15.
  2. Taxes

    Happily Married? File Taxes Separately!

    Just because you are in love doesn't mean that a joint return is best for both of you.
  3. Options & Futures

    Teaching Your Partner About Household Finances

    This is just one more way to take care of one of the most important people in your life.
  4. Options & Futures

    Which is better for tax deductions, itemization or a standard deduction?

    Each deduction that you claim may result in a decrease in the amount of taxes that you owe. However, whether you receive the maximum possible deduction could depend on whether your deduction ...
  5. Taxes

    Does everyone have to file a federal tax return?

    This may come as a surprise to many individuals, but not everyone needs to file a federal tax return. According to the IRS, many individuals who do not need to file tax returns still do, because ...
  6. Personal Finance

    Value-Added Tax (VAT)

    Value-added tax, or VAT, is a tax on the added value of a good as it moves through the supply chain to the end consumer. In effect, the tax is levied on the gross margin at each point in the ...
  7. Retirement

    Who is exempt from paying Social Security taxes?

    Learn about the groups of people who qualify for exemption from Social Security taxes, and explore the process of applying for exemption.
  8. Taxes

    Can you write variable costs off your taxes?

    Learn if you can deduct variable or fixed costs from your business taxes and learn more about business deductions, cost of goods sold and gross profit.
  9. Taxes

    What are the tax incentives or disincentives to vertical integration?

    Merging companies through vertical integration can provide companies in the United States with a marginally advantageous position in terms of taxation.
  10. Investing Basics

    Are arm's length transactions always better than transactions not at arm's length?

    Transactions not at arm's length have real tax and other consequences for individuals and businesses, but they are not necessarily always worse.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center