Separation of Liability Relief: Who Qualifies?
If you’re dealing with a difficult time in your life, then any added tax burden can just make things worse. Relief by Separation of Liability is a technique offered by the IRS to allocate tax understatement, interest and penalties from a joint return between you and your spouse or former spouse. While you can’t use it to divvy up a refund, this kind of relief can be an excellent way to sort out unpaid liabilities.
There’s no such thing a free lunch when dealing with taxes, however. Only certain taxpayers qualify for relief under this rule.
Separation Relief Requirements
To request separation of liability relief from the IRS, you need to have filed a joint return in the past. If you didn’t file jointly, then chances are that you don’t have too much in the way of this kind of liability anyway. Otherwise, you have to fulfill one of two requirements at the time you send in your IRS Form 8857.
Scenarios that meet those requirements include:
- You have not been a member of the same household as your spouse during the last 12 month period ending on the day you sent in Form 8857.
- You are either legally separated from your spouse or are no longer married to them.
While it’s easy to know the exact date you legally separated from your spouse, taxpayers trying to claim they weren’t a member of the same household are dealing with a slightly more complicated situation.
Proving You’re Not Members of the Same Household
Estranged spouses who aren’t legally separated aren’t part of the same household if they live in physically different locations. However, the IRS has some very specific rules about what constitutes living in a different location. If you were in the same dwelling during the last year, then you’re considered members of the same household. Keep in mind that the IRS might consider a shared apartment to be the same dwelling. The same might even go for a trailer in some cases.
Even if you didn’t live in the same dwelling, you have to prove beyond reasonable doubt that neither of you planned to move back in together. IRS agents might consider issues like military service or an extended illness to be only temporary reasons for separation.
When you file Form 8857, you’ll need to also prove that you didn’t transfer any property in order to avoid tax. If you did make any transfers, then providing the IRS with a divorce decree can help you to prove you weren’t trying to evade any taxes.
Finding Out if You Qualify for Liability Relief
In most cases, it should be obvious if you qualify for this kind of relief. Dealing with a messy situation isn’t ever easy, however. We’ve helped countless others navigate the red tape so they can free themselves from the tax burden they’re suffering under. Contact us at Success Tax Relief online or call us today at 877-825-1179 to talk with an expert about whether you qualify for this or any other relief program.