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Thursday, October 7, 2010

INNOCENT SPOUSE RELIEF

If your ex husband has been abusive to you, it is quite likely that he has been disreputable in other areas of his life. The first place to look in order to find evidence of that is to review your ex's financial dealings as reported in your joint taxes. Look at your prior tax returns. Does anything strike you as possibly not correct?

This is particularly a concern if your ex husband has been working in his own home business or you have both been operating one together. With a home business there are numerous opportunities to hide assets or falsify your expenses.

When you look at your tax returns, ask yourself whether the tax return which you signed is the one that was eventually sent to the IRS. Does your ex, or did your ex ever forge your signature? Could he have forged your signature on a tax return that you never saw but that was sent to the IRS?

If you have any reason to suspect this may be true, you can get a copy of your joint tax returns and the backup documents from the IRS. Unfortunately, the farther back you go the less reliable the documents get.

Your other option is to file for Innocent Spouse Relief for the years where you suspect there may be underpayments to the IRS. Check out IRS Publication 971 to find out how it works and if you choose to follow through with it, fill out IRS Form 8857. (For more detailed information google these terms online.)

Filing form 8857 will initiate an IRS investigation into your previous joint tax returns, but, if you are found eligible for Innocent Spouse Relief, you won't be held legally liable. If it turns out you are not eligible for Innocent Spouse Relief there are other options such as Equitable Relief which you can investigate with your tax accountant which may also protect you from liability.

The advantage of an IRS investigation is that if you ex has committed any financial fraud, evidence of this will come to light and will be an advantage to you in terms of revealing your ex's bad character.

At the very least, once an investigation is done and the liabilities resolved, you can move on in your life as a single person without having to worry about it. Otherwise, you can never tell when the IRS may eventually catch up to these returns, find the problems and go after you. As a final note, the form 8857 is tricky--don't do it yourself. Have an accountant or a lawyer fill the form out on your behalf.

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