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File An Amended Tax Return For 2011

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File An Amended Tax Return For 2011

File an amended tax return for 2011 1. File an amended tax return for 2011   Definitions You Need To Know Table of Contents Other options. File an amended tax return for 2011 Exception. File an amended tax return for 2011 Certain terms used in this publication are defined below. File an amended tax return for 2011 The same term used in another publication may have a slightly different meaning. File an amended tax return for 2011 Annual additions. File an amended tax return for 2011   Annual additions are the total of all your contributions in a year, employee contributions (not including rollovers), and forfeitures allocated to a participant's account. File an amended tax return for 2011 Annual benefits. File an amended tax return for 2011   Annual benefits are the benefits to be paid yearly in the form of a straight life annuity (with no extra benefits) under a plan to which employees do not contribute and under which no rollover contributions are made. File an amended tax return for 2011 Business. File an amended tax return for 2011   A business is an activity in which a profit motive is present and economic activity is involved. File an amended tax return for 2011 Service as a newspaper carrier under age 18 or as a public official is not a business. File an amended tax return for 2011 Common-law employee. File an amended tax return for 2011   A common-law employee is any individual who, under common law, would have the status of an employee. File an amended tax return for 2011 A leased employee can also be a common-law employee. File an amended tax return for 2011   A common-law employee is a person who performs services for an employer who has the right to control and direct the results of the work and the way in which it is done. File an amended tax return for 2011 For example, the employer: Provides the employee's tools, materials, and workplace, and Can fire the employee. File an amended tax return for 2011   Common-law employees are not self-employed and cannot set up retirement plans for income from their work, even if that income is self-employment income for social security tax purposes. File an amended tax return for 2011 For example, common-law employees who are ministers, members of religious orders, full-time insurance salespeople, and U. File an amended tax return for 2011 S. File an amended tax return for 2011 citizens employed in the United States by foreign governments cannot set up retirement plans for their earnings from those employments, even though their earnings are treated as self-employment income. File an amended tax return for 2011   However, an individual may be a common-law employee and a self-employed person as well. File an amended tax return for 2011 For example, an attorney can be a corporate common-law employee during regular working hours and also practice law in the evening as a self-employed person. File an amended tax return for 2011 In another example, a minister employed by a congregation for a salary is a common-law employee even though the salary is treated as self-employment income for social security tax purposes. File an amended tax return for 2011 However, fees reported on Schedule C (Form 1040), Profit or Loss From Business, for performing marriages, baptisms, and other personal services are self-employment earnings for qualified plan purposes. File an amended tax return for 2011 Compensation. File an amended tax return for 2011   Compensation for plan allocations is the pay a participant received from you for personal services for a year. File an amended tax return for 2011 You can generally define compensation as including all the following payments. File an amended tax return for 2011 Wages and salaries. File an amended tax return for 2011 Fees for professional services. File an amended tax return for 2011 Other amounts received (cash or noncash) for personal services actually rendered by an employee, including, but not limited to, the following items. File an amended tax return for 2011 Commissions and tips. File an amended tax return for 2011 Fringe benefits. File an amended tax return for 2011 Bonuses. File an amended tax return for 2011   For a self-employed individual, compensation means the earned income, discussed later, of that individual. File an amended tax return for 2011   Compensation generally includes amounts deferred in the following employee benefit plans. File an amended tax return for 2011 These amounts are elective deferrals. File an amended tax return for 2011 Qualified cash or deferred arrangement (section 401(k) plan). File an amended tax return for 2011 Salary reduction agreement to contribute to a tax-sheltered annuity (section 403(b) plan), a SIMPLE IRA plan, or a SARSEP. File an amended tax return for 2011 Section 457 nonqualified deferred compensation plan. File an amended tax return for 2011 Section 125 cafeteria plan. File an amended tax return for 2011   However, an employer can choose to exclude elective deferrals under the above plans from the definition of compensation. File an amended tax return for 2011 The limit on elective deferrals is discussed in chapter 2 under Salary Reduction Simplified Employee Pension (SARSEP) and in chapter 4. File an amended tax return for 2011 Other options. File an amended tax return for 2011   In figuring the compensation of a participant, you can treat any of the following amounts as the employee's compensation. File an amended tax return for 2011 The employee's wages as defined for income tax withholding purposes. File an amended tax return for 2011 The employee's wages you report in box 1 of Form W-2, Wage and Tax Statement. File an amended tax return for 2011 The employee's social security wages (including elective deferrals). File an amended tax return for 2011   Compensation generally cannot include either of the following items. File an amended tax return for 2011 Nontaxable reimbursements or other expense allowances. File an amended tax return for 2011 Deferred compensation (other than elective deferrals). File an amended tax return for 2011 SIMPLE plans. File an amended tax return for 2011   A special definition of compensation applies for SIMPLE plans. File an amended tax return for 2011 See chapter 3. File an amended tax return for 2011 Contribution. File an amended tax return for 2011   A contribution is an amount you pay into a plan for all those participating in the plan, including self-employed individuals. File an amended tax return for 2011 Limits apply to how much, under the contribution formula of the plan, can be contributed each year for a participant. File an amended tax return for 2011 Deduction. File an amended tax return for 2011   A deduction is the plan contributions you can subtract from gross income on your federal income tax return. File an amended tax return for 2011 Limits apply to the amount deductible. File an amended tax return for 2011 Earned income. File an amended tax return for 2011   Earned income is net earnings from self-employment, discussed later, from a business in which your services materially helped to produce the income. File an amended tax return for 2011   You can also have earned income from property your personal efforts helped create, such as royalties from your books or inventions. File an amended tax return for 2011 Earned income includes net earnings from selling or otherwise disposing of the property, but it does not include capital gains. File an amended tax return for 2011 It includes income from licensing the use of property other than goodwill. File an amended tax return for 2011   Earned income includes amounts received for services by self-employed members of recognized religious sects opposed to social security benefits who are exempt from self-employment tax. File an amended tax return for 2011   If you have more than one business, but only one has a retirement plan, only the earned income from that business is considered for that plan. File an amended tax return for 2011 Employer. File an amended tax return for 2011   An employer is generally any person for whom an individual performs or did perform any service, of whatever nature, as an employee. File an amended tax return for 2011 A sole proprietor is treated as his or her own employer for retirement plan purposes. File an amended tax return for 2011 However, a partner is not an employer for retirement plan purposes. File an amended tax return for 2011 Instead, the partnership is treated as the employer of each partner. File an amended tax return for 2011 Highly compensated employee. File an amended tax return for 2011   A highly compensated employee is an individual who: Owned more than 5% of the interest in your business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from you of more than $115,000 (if the preceding year is 2012, 2013, or 2014) and, if you so choose, was in the top 20% of employees when ranked by compensation. File an amended tax return for 2011 Leased employee. File an amended tax return for 2011   A leased employee who is not your common-law employee must generally be treated as your employee for retirement plan purposes if he or she does all the following. File an amended tax return for 2011 Provides services to you under an agreement between you and a leasing organization. File an amended tax return for 2011 Has performed services for you (or for you and related persons) substantially full time for at least 1 year. File an amended tax return for 2011 Performs services under your primary direction or control. File an amended tax return for 2011 Exception. File an amended tax return for 2011   A leased employee is not treated as your employee if all the following conditions are met. File an amended tax return for 2011 Leased employees are not more than 20% of your non-highly compensated work force. File an amended tax return for 2011 The employee is covered under the leasing organization's qualified pension plan. File an amended tax return for 2011 The leasing organization's plan is a money purchase pension plan that has all the following provisions. File an amended tax return for 2011 Immediate participation. File an amended tax return for 2011 (This requirement does not apply to any individual whose compensation from the leasing organization in each plan year during the 4-year period ending with the plan year is less than $1,000. File an amended tax return for 2011 ) Full and immediate vesting. File an amended tax return for 2011 A nonintegrated employer contribution rate of at least 10% of compensation for each participant. File an amended tax return for 2011 However, if the leased employee is your common-law employee, that employee will be your employee for all purposes, regardless of any pension plan of the leasing organization. File an amended tax return for 2011 Net earnings from self-employment. File an amended tax return for 2011   For SEP and qualified plans, net earnings from self-employment is your gross income from your trade or business (provided your personal services are a material income-producing factor) minus allowable business deductions. File an amended tax return for 2011 Allowable deductions include contributions to SEP and qualified plans for common-law employees and the deduction allowed for the deductible part of your self-employment tax. File an amended tax return for 2011   Net earnings from self-employment does not include items excluded from gross income (or their related deductions) other than foreign earned income and foreign housing cost amounts. File an amended tax return for 2011   For the deduction limits, earned income is net earnings for personal services actually rendered to the business. File an amended tax return for 2011 You take into account the income tax deduction for the deductible part of self-employment tax and the deduction for contributions to the plan made on your behalf when figuring net earnings. File an amended tax return for 2011   Net earnings include a partner's distributive share of partnership income or loss (other than separately stated items, such as capital gains and losses). File an amended tax return for 2011 It does not include income passed through to shareholders of S corporations. File an amended tax return for 2011 Guaranteed payments to limited partners are net earnings from self-employment if they are paid for services to or for the partnership. File an amended tax return for 2011 Distributions of other income or loss to limited partners are not net earnings from self-employment. File an amended tax return for 2011   For SIMPLE plans, net earnings from self-employment is the amount on line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040), Self-Employment Tax, before subtracting any contributions made to the SIMPLE plan for yourself. File an amended tax return for 2011 Qualified plan. File an amended tax return for 2011   A qualified plan is a retirement plan that offers a tax-favored way to save for retirement. File an amended tax return for 2011 You can deduct contributions made to the plan for your employees. File an amended tax return for 2011 Earnings on these contributions are generally tax free until distributed at retirement. File an amended tax return for 2011 Profit-sharing, money purchase, and defined benefit plans are qualified plans. File an amended tax return for 2011 A 401(k) plan is also a qualified plan. File an amended tax return for 2011 Participant. File an amended tax return for 2011   A participant is an eligible employee who is covered by your retirement plan. File an amended tax return for 2011 See the discussions of the different types of plans for the definition of an employee eligible to participate in each type of plan. File an amended tax return for 2011 Partner. File an amended tax return for 2011   A partner is an individual who shares ownership of an unincorporated trade or business with one or more persons. File an amended tax return for 2011 For retirement plans, a partner is treated as an employee of the partnership. File an amended tax return for 2011 Self-employed individual. File an amended tax return for 2011   An individual in business for himself or herself, and whose business is not incorporated, is self-employed. File an amended tax return for 2011 Sole proprietors and partners are self-employed. File an amended tax return for 2011 Self-employment can include part-time work. File an amended tax return for 2011   Not everyone who has net earnings from self-employment for social security tax purposes is self-employed for qualified plan purposes. File an amended tax return for 2011 See Common-law employee and Net earnings from self-employment , earlier. File an amended tax return for 2011   In addition, certain fishermen may be considered self-employed for setting up a qualified plan. File an amended tax return for 2011 See Publication 595, Capital Construction Fund for Commercial Fishermen, for the special rules used to determine whether fishermen are self-employed. File an amended tax return for 2011 Sole proprietor. File an amended tax return for 2011   A sole proprietor is an individual who owns an unincorporated business by himself or herself, including a single member limited liability company that is treated as a disregarded entity for tax purposes. File an amended tax return for 2011 For retirement plans, a sole proprietor is treated as both an employer and an employee. File an amended tax return for 2011 Prev  Up  Next   Home   More Online Publications
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The File An Amended Tax Return For 2011

File an amended tax return for 2011 Publication 971 - Main Content Table of Contents How To Request ReliefException for agreements relating to TEFRA partnership proceedings. File an amended tax return for 2011 The IRS Must Contact Your Spouse or Former Spouse Tax Court Review of Request Community Property LawsRelief for Married Persons Who Did Not File Joint Returns Innocent Spouse ReliefUnderstated Tax Erroneous Items Actual Knowledge or Reason To Know Indications of Unfairness for Innocent Spouse Relief Separation of Liability ReliefLimitations on Relief Equitable ReliefConditions for Getting Equitable Relief Factors for Determining Whether To Grant Equitable Relief RefundsProof Required Refunds Under Equitable Relief Limit on Amount of Refund Filled-in Form 8857 Flowcharts How To Request Relief File Form 8857 to ask the IRS for the types of relief discussed in this publication. File an amended tax return for 2011 If you are requesting relief for more than three tax years, you must file an additional Form 8857. File an amended tax return for 2011 The IRS will review your Form 8857 and let you know if you qualify. File an amended tax return for 2011 A completed Form 8857 is shown later. File an amended tax return for 2011 When to file Form 8857. File an amended tax return for 2011   You should file Form 8857 as soon as you become aware of a tax liability for which you believe only your spouse or former spouse should be held responsible. File an amended tax return for 2011 The following are some of the ways you may become aware of such a liability. File an amended tax return for 2011 The IRS is examining your tax return and proposing to increase your tax liability. File an amended tax return for 2011 The IRS sends you a notice. File an amended tax return for 2011   You must file Form 8857 no later than two years after the date on which the IRS first attempted to collect the tax from you that occurs after July 22, 1998. File an amended tax return for 2011 (But see the exceptions below for different filing deadlines that apply. File an amended tax return for 2011 ) For this reason, do not delay filing because you do not have all the documentation. File an amended tax return for 2011   Collection activities that may start the 2-year period are: The IRS offset your income tax refund against an amount you owed on a joint return for another year and the IRS informed you about your right to file Form 8857. File an amended tax return for 2011 The filing of a claim by the IRS in a court proceeding in which you were a party or the filing of a claim in a proceeding that involves your property. File an amended tax return for 2011 This includes the filing of a proof of claim in a bankruptcy proceeding. File an amended tax return for 2011 The filing of a suit by the United States against you to collect the joint liability. File an amended tax return for 2011 The issuance of a section 6330 notice, which notifies you of the IRS' intent to levy and your right to a collection due process (CDP) hearing. File an amended tax return for 2011 The collection-related notices include, but are not limited to, Letter 11 and Letter 1058. File an amended tax return for 2011 Exception for equitable relief. File an amended tax return for 2011   On July 25, 2011, the IRS issued Notice 2011-70 (available at www. File an amended tax return for 2011 irs. File an amended tax return for 2011 gov/irb/2011-32_IRB/ar11. File an amended tax return for 2011 html) expanding the amount of time to request equitable relief. File an amended tax return for 2011 The amount of time to request equitable relief depends on whether you are seeking relief from a balance due, seeking a credit or refund, or both: Balance Due – Generally, you must file your request within the time period the IRS has to collect the tax. File an amended tax return for 2011 Generally, the IRS has 10 years from the date the tax liability was assessed to collect the tax. File an amended tax return for 2011 In certain cases, the 10-year period is suspended. File an amended tax return for 2011 The amount of time the suspension is in effect will extend the time the IRS has to collect the tax. File an amended tax return for 2011 See Pub. File an amended tax return for 2011 594, The IRS Collection Process, for details. File an amended tax return for 2011 Credit or Refund – Generally, you must file your request within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later. File an amended tax return for 2011 But you may have more time to file if you live in a federally declared disaster area or you are physically or mentally unable to manage your financial affairs. File an amended tax return for 2011 See Pub. File an amended tax return for 2011 556, Examination of Returns, Appeal Rights, and Claims for Refund, for details. File an amended tax return for 2011 Both a Balance Due and a Credit or Refund – If you are seeking a refund of amounts you paid and relief from a balance due over and above what you have paid, the time period for credit or refund will apply to any payments you have made, and the time period for collection of a balance due amount will apply to any unpaid liability. File an amended tax return for 2011 Exception for relief based on community property laws. File an amended tax return for 2011   If you are requesting relief based on community property laws, a different filing deadline applies. File an amended tax return for 2011 See Relief from liability arising from community property law discussed later under Community Property Laws . File an amended tax return for 2011 Form 8857 filed by or on behalf of a decedent. File an amended tax return for 2011   An executor (including any other duly appointed representative) may pursue a Form 8857 filed during the decedent's lifetime. File an amended tax return for 2011 An executor (including any other duly appointed representative) may also file Form 8857 as long as the decedent satisfied the eligibility requirements while alive. File an amended tax return for 2011 For purposes of separation of liability relief (discussed later), the decedent's marital status is determined on the earlier of the date relief was requested or the date of death. File an amended tax return for 2011 Situations in which you are not entitled to relief. File an amended tax return for 2011   You are not entitled to innocent spouse relief for any tax year to which the following situations apply. File an amended tax return for 2011 In a final decision dated after July 22, 1998, a court considered whether to grant you relief from joint liability and decided not to do so. File an amended tax return for 2011 In a final decision dated after July 22, 1998, a court did not consider whether to grant you relief from joint liability, but you meaningfully participated in the proceeding and could have asked for relief. File an amended tax return for 2011 You entered into an offer in compromise with the IRS. File an amended tax return for 2011 You entered into a closing agreement with the IRS that disposed of the same liability for which you want to seek relief. File an amended tax return for 2011 Exception for agreements relating to TEFRA partnership proceedings. File an amended tax return for 2011   You may be entitled to relief, discussed in (4) earlier, if you entered into a closing agreement for both partnership items and nonpartnership items, while you were a party to a pending TEFRA partnership proceeding. File an amended tax return for 2011 (TEFRA is an acronym that refers to the “Tax Equity and Fiscal Responsibility Act of 1982” that prescribed the tax treatment of partnership items. File an amended tax return for 2011 ) You are not entitled to relief for the nonpartnership items, but you will be entitled to relief for the partnership items (if you otherwise qualify). File an amended tax return for 2011 Transferee liability not affected by innocent spouse relief provisions. File an amended tax return for 2011   The innocent spouse relief provisions do not affect tax liabilities that arise under federal or state transferee liability or property laws. File an amended tax return for 2011 Therefore, even if you are relieved of the tax liability under the innocent spouse relief provisions, you may remain liable for the unpaid tax, interest, and penalties to the extent provided by these laws. File an amended tax return for 2011 Example. File an amended tax return for 2011 Herb and Wanda timely filed their 2008 joint income tax return on April 15, 2009. File an amended tax return for 2011 Herb died in March 2010, and the executor of Herb's will transferred all of the estate's assets to Wanda. File an amended tax return for 2011 In August 2010, the IRS assessed a deficiency for the 2008 return. File an amended tax return for 2011 The items causing the deficiency belong to Herb. File an amended tax return for 2011 Wanda is relieved of the deficiency under the innocent spouse relief provisions, and Herb's estate remains solely liable for it. File an amended tax return for 2011 However, the IRS may collect the deficiency from Wanda to the extent permitted under federal or state transferee liability or property laws. File an amended tax return for 2011 The IRS Must Contact Your Spouse or Former Spouse By law, the IRS must contact your spouse or former spouse. File an amended tax return for 2011 There are no exceptions, even for victims of spousal abuse or domestic violence. File an amended tax return for 2011 We will inform your spouse or former spouse that you filed Form 8857 and will allow him or her to participate in the process. File an amended tax return for 2011 If you are requesting relief from joint and several liability on a joint return, the IRS must also inform him or her of its preliminary and final determinations regarding your request for relief. File an amended tax return for 2011 However, to protect your privacy, the IRS will not disclose your personal information (for example, your current name, address, phone number(s), information about your employer, your income or assets) or any other information that does not relate to making a determination about your request for relief from liability. File an amended tax return for 2011 If you petition the Tax Court (explained below), your spouse or former spouse may see your personal information. File an amended tax return for 2011 Tax Court Review of Request After you file Form 8857, you may be able to petition (ask) the United States Tax Court to review your request for relief in the following two situations. File an amended tax return for 2011 The IRS sends you a final determination letter regarding your request for relief. File an amended tax return for 2011 You do not receive a final determination letter from the IRS within six months from the date you filed Form 8857. File an amended tax return for 2011 If you seek equitable relief for an underpaid tax, you will be able to get a Tax Court review of your request only if the tax arose or remained unpaid on or after December 20, 2006. File an amended tax return for 2011 The United States Tax Court is an independent judicial body and is not part of the IRS. File an amended tax return for 2011 You must file a petition with the United States Tax Court in order for it to review your request for relief. File an amended tax return for 2011 You must file the petition no later than the 90th day after the date the IRS mails its final determination notice to you. File an amended tax return for 2011 If you do not file a petition, or you file it late, the Tax Court cannot review your request for relief. File an amended tax return for 2011 You can get a copy of the rules for filing a petition by writing to the Tax Court at the following address:    United States Tax Court 400 Second Street, NW Washington, DC 20217 Or you can visit the Tax Court's website at www. File an amended tax return for 2011 ustaxcourt. File an amended tax return for 2011 gov Community Property Laws You must generally follow community property laws when filing a tax return if you are married and live in a community property state. File an amended tax return for 2011 Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. File an amended tax return for 2011 Generally, community property laws require you to allocate community income and expenses equally between both spouses. File an amended tax return for 2011 However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. File an amended tax return for 2011 Relief for Married Persons Who Did Not File Joint Returns Married persons who live in community property states, but who did not file joint returns, have two ways to get relief. File an amended tax return for 2011 Relief From Liability Arising From Community Property Law You are not responsible for the tax relating to an item of community income if all the following conditions exist. File an amended tax return for 2011 You did not file a joint return for the tax year. File an amended tax return for 2011 You did not include the item of community income in gross income. File an amended tax return for 2011 The item of community income you did not include is one of the following: Wages, salaries, and other compensation your spouse (or former spouse) received for services he or she performed as an employee. File an amended tax return for 2011 Income your spouse (or former spouse) derived from a trade or business he or she operated as a sole proprietor. File an amended tax return for 2011 Your spouse's (or former spouse's) distributive share of partnership income. File an amended tax return for 2011 Income from your spouse's (or former spouse's) separate property (other than income described in (a), (b), or (c)). File an amended tax return for 2011 Use the appropriate community property law to determine what is separate property. File an amended tax return for 2011 Any other income that belongs to your spouse (or former spouse) under community property law. File an amended tax return for 2011 You establish that you did not know of, and had no reason to know of, that community income. File an amended tax return for 2011 See  Actual Knowledge or Reason To Know , below. File an amended tax return for 2011 Under all facts and circumstances, it would not be fair to include the item of community income in your gross income. File an amended tax return for 2011 See Indications of unfairness for liability arising from community property law, later. File an amended tax return for 2011 Actual knowledge or reason to know. File an amended tax return for 2011   You knew or had reason to know of an item of community income if: You actually knew of the item of community income, or A reasonable person in similar circumstances would have known of the item of community income. File an amended tax return for 2011 Amount of community income unknown. File an amended tax return for 2011   If you are aware of the source of the item of community income or the income-producing activity, but are unaware of the specific amount, you are considered to know or have reason to know of the item of community income. File an amended tax return for 2011 Not knowing the specific amount is not a basis for relief. File an amended tax return for 2011 Reason to know. File an amended tax return for 2011   The IRS will consider all facts and circumstances in determining whether you had reason to know of an item of community income. File an amended tax return for 2011 The facts and circumstances include: The nature of the item of community income and the amount of the item relative to other income items. File an amended tax return for 2011 The financial situation of you and your spouse (or former spouse). File an amended tax return for 2011 Your educational background and business experience. File an amended tax return for 2011 Whether the item of community income represented a departure from a recurring pattern reflected in prior years' returns (for example, omitted income from an investment regularly reported on prior years' returns). File an amended tax return for 2011 Indications of unfairness for liability arising from community property law. File an amended tax return for 2011   The IRS will consider all of the facts and circumstances of the case in order to determine whether it is unfair to hold you responsible for the understated tax due to the item of community income. File an amended tax return for 2011   The following are examples of factors the IRS will consider. File an amended tax return for 2011 Whether you received a benefit, either directly or indirectly, from the omitted item of community income (defined below). File an amended tax return for 2011 Whether your spouse (or former spouse) deserted you. File an amended tax return for 2011 Whether you and your spouse have been divorced or separated. File an amended tax return for 2011  For other factors see Factors for Determining Whether To Grant Equitable Relief later. File an amended tax return for 2011 Benefit from omitted item of community income. File an amended tax return for 2011   A benefit includes normal support, but does not include de minimis (small) amounts. File an amended tax return for 2011 Evidence of a direct or indirect benefit may consist of transfers of property or rights to property, including transfers received several years after the filing of the return. File an amended tax return for 2011   For example, if you receive property, including life insurance proceeds, from your spouse (or former spouse) and the property is traceable to omitted items of community income attributable to your spouse (or former spouse), you are considered to have benefitted from those omitted items of community income. File an amended tax return for 2011 Equitable Relief If you do not qualify for the relief described above and are now liable for an underpaid or understated tax you believe should be paid only by your spouse (or former spouse), you may request equitable relief (discussed later). File an amended tax return for 2011 How and When To Request Relief You request relief by filing Form 8857, as discussed earlier. File an amended tax return for 2011 Fill in Form 8857 according to the instructions. File an amended tax return for 2011 For relief from liability arising from community property law, you must file Form 8857 no later than 6 months before the expiration of the period of limitations on assessment (including extensions) against your spouse for the tax year for which you are requesting relief. File an amended tax return for 2011 However, if the IRS begins an examination of your return during that 6-month period, the latest time for requesting relief is 30 days after the date the IRS' initial contact letter to you. File an amended tax return for 2011 The period of limitation on assessment is the amount of time, generally three years, that the IRS has from the date you filed the return to assess taxes that you owe. File an amended tax return for 2011 Innocent Spouse Relief By requesting innocent spouse relief, you can be relieved of responsibility for paying tax, interest, and penalties if your spouse (or former spouse) improperly reported items or omitted items on your tax return. File an amended tax return for 2011 Generally, the tax, interest, and penalties that qualify for relief can only be collected from your spouse (or former spouse). File an amended tax return for 2011 However, you are jointly and individually responsible for any tax, interest, and penalties that do not qualify for relief. File an amended tax return for 2011 The IRS can collect these amounts from either you or your spouse (or former spouse). File an amended tax return for 2011 You must meet all of the following conditions to qualify for innocent spouse relief. File an amended tax return for 2011 You filed a joint return. File an amended tax return for 2011 There is an understated tax on the return that is due to erroneous items (defined later) of your spouse (or former spouse). File an amended tax return for 2011 You can show that when you signed the joint return you did not know, and had no reason to know, that the understated tax existed (or the extent to which the understated tax existed). File an amended tax return for 2011 See Actual Knowledge or Reason To Know, later. File an amended tax return for 2011 Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated tax. File an amended tax return for 2011 See Indications of Unfairness for Innocent Spouse Relief , later. File an amended tax return for 2011 Innocent spouse relief will not be granted if the IRS proves that you and your spouse (or former spouse) transferred property to one another as part of a fraudulent scheme. File an amended tax return for 2011 A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. File an amended tax return for 2011 Understated Tax You have an understated tax if the IRS determined that your total tax should be more than the amount that was actually shown on your return. File an amended tax return for 2011 Erroneous Items Erroneous items are either of the following. File an amended tax return for 2011 Unreported income. File an amended tax return for 2011 This is any gross income item received by your spouse (or former spouse) that is not reported. File an amended tax return for 2011 Incorrect deduction, credit, or basis. File an amended tax return for 2011 This is any improper deduction, credit, or property basis claimed by your spouse (or former spouse). File an amended tax return for 2011 The following are examples of erroneous items. File an amended tax return for 2011 The expense for which the deduction is taken was never paid or incurred. File an amended tax return for 2011 For example, your spouse, a cash-basis taxpayer, deducted $10,000 of advertising expenses on Schedule C of your joint Form 1040, but never paid for any advertising. File an amended tax return for 2011 The expense does not qualify as a deductible expense. File an amended tax return for 2011 For example, your spouse claimed a business fee deduction of $10,000 that was for the payment of state fines. File an amended tax return for 2011 Fines are not deductible. File an amended tax return for 2011 No factual argument can be made to support the deductibility of the expense. File an amended tax return for 2011 For example, your spouse claimed $4,000 for security costs related to a home office, which were actually veterinary and food costs for your family's two dogs. File an amended tax return for 2011 Actual Knowledge or Reason To Know You knew or had reason to know of an understated tax if: You actually knew of the understated tax, or A reasonable person in similar circumstances would have known of the understated tax. File an amended tax return for 2011 Actual knowledge. File an amended tax return for 2011   If you actually knew about an erroneous item that belongs to your spouse (or former spouse), the relief discussed here does not apply to any part of the understated tax due to that item. File an amended tax return for 2011 You and your spouse (or former spouse) remain jointly liable for that part of the understated tax. File an amended tax return for 2011 For information about the criteria for determining whether you actually knew about an erroneous item, see Actual Knowledge later under Separation of Liability Relief. File an amended tax return for 2011 Reason to know. File an amended tax return for 2011   If you had reason to know about an erroneous item that belongs to your spouse (or former spouse), the relief discussed here does not apply to any part of the understated tax due to that item. File an amended tax return for 2011 You and your spouse (or former spouse) remain jointly liable for that part of the understated tax. File an amended tax return for 2011   The IRS will consider all facts and circumstances in determining whether you had reason to know of an understated tax due to an erroneous item. File an amended tax return for 2011 The facts and circumstances include: The nature of the erroneous item and the amount of the erroneous item relative to other items. File an amended tax return for 2011 The financial situation of you and your spouse (or former spouse). File an amended tax return for 2011 Your educational background and business experience. File an amended tax return for 2011 The extent of your participation in the activity that resulted in the erroneous item. File an amended tax return for 2011 Whether you failed to ask, at or before the time the return was signed, about items on the return or omitted from the return that a reasonable person would question. File an amended tax return for 2011 Whether the erroneous item represented a departure from a recurring pattern reflected in prior years' returns (for example, omitted income from an investment regularly reported on prior years' returns). File an amended tax return for 2011 Partial relief when a portion of erroneous item is unknown. File an amended tax return for 2011   You may qualify for partial relief if, at the time you filed your return, you had no knowledge or reason to know of only a portion of an erroneous item. File an amended tax return for 2011 You will be relieved of the understated tax due to that portion of the item if all other requirements are met for that portion. File an amended tax return for 2011 Example. File an amended tax return for 2011 At the time you signed your joint return, you knew that your spouse did not report $5,000 of gambling winnings. File an amended tax return for 2011 The IRS examined your tax return several months after you filed it and determined that your spouse's unreported gambling winnings were actually $25,000. File an amended tax return for 2011 You established that you did not know about, and had no reason to know about, the additional $20,000 because of the way your spouse handled gambling winnings. File an amended tax return for 2011 The understated tax due to the $20,000 will qualify for innocent spouse relief if you meet the other requirements. File an amended tax return for 2011 The understated tax due to the $5,000 of gambling winnings you knew about will not qualify for relief. File an amended tax return for 2011 Indications of Unfairness for Innocent Spouse Relief The IRS will consider all of the facts and circumstances of the case in order to determine whether it is unfair to hold you responsible for the understated tax. File an amended tax return for 2011 The following are examples of factors the IRS will consider. File an amended tax return for 2011 Whether you received a significant benefit (defined below), either directly or indirectly, from the understated tax. File an amended tax return for 2011 Whether your spouse (or former spouse) deserted you. File an amended tax return for 2011 Whether you and your spouse have been divorced or separated. File an amended tax return for 2011 Whether you received a benefit on the return from the understated tax. File an amended tax return for 2011 For other factors, see Factors for Determining Whether To Grant Equitable Relief later under Equitable Relief. File an amended tax return for 2011 Significant benefit. File an amended tax return for 2011   A significant benefit is any benefit in excess of normal support. File an amended tax return for 2011 Normal support depends on your particular circumstances. File an amended tax return for 2011 Evidence of a direct or indirect benefit may consist of transfers of property or rights to property, including transfers that may be received several years after the year of the understated tax. File an amended tax return for 2011 Example. File an amended tax return for 2011 You receive money from your spouse that is beyond normal support. File an amended tax return for 2011 The money can be traced to your spouse's lottery winnings that were not reported on your joint return. File an amended tax return for 2011 You will be considered to have received a significant benefit from that income. File an amended tax return for 2011 This is true even if your spouse gives you the money several years after he or she received it. File an amended tax return for 2011 Separation of Liability Relief Under this type of relief, the understated tax (plus interest and penalties) on your joint return is allocated between you and your spouse (or former spouse). File an amended tax return for 2011 The understated tax allocated to you is generally the amount you are responsible for. File an amended tax return for 2011 This type of relief is available only for unpaid liabilities resulting from the understated tax. File an amended tax return for 2011 Refunds are not allowed. File an amended tax return for 2011 To request separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. File an amended tax return for 2011 You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. File an amended tax return for 2011 (Under this rule, you are no longer married if you are widowed. File an amended tax return for 2011 ) You were not a member of the same household (explained below) as the spouse with whom you filed the joint return at any time during the 12-month per- iod ending on the date you file Form 8857. File an amended tax return for 2011 Members of the same household. File an amended tax return for 2011   You and your spouse are not members of the same household if you are living apart and are estranged. File an amended tax return for 2011 However, you and your spouse are considered members of the same household if any of the following conditions are met. File an amended tax return for 2011 You and your spouse reside in the same dwelling. File an amended tax return for 2011 You and your spouse reside in separate dwellings but are not estranged, and one of you is temporarily absent from the other's household as explained in (3) below. File an amended tax return for 2011 Either spouse is temporarily absent from the household and it is reasonable to assume that the absent spouse will return to the household, and the household or a substantially equivalent household is maintained in anticipation of the absent spouse's return. File an amended tax return for 2011 Examples of temporary absences include absence due to imprisonment, illness, business, vacation, military service, or education. File an amended tax return for 2011 Burden of proof. File an amended tax return for 2011   You must be able to prove that you meet all of the requirements for separation of liability relief (except actual knowledge) and that you did not transfer property to avoid tax (discussed later). File an amended tax return for 2011 You must also establish the basis for allocating the erroneous items. File an amended tax return for 2011 Limitations on Relief Even if you meet the requirements discussed previously, separation of liability relief will not be granted in the following situations. File an amended tax return for 2011 The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. File an amended tax return for 2011 A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. File an amended tax return for 2011 The IRS proves that at the time you signed your joint return, you had actual knowledge (explained below) of any erroneous items giving rise to the deficiency that were allocable to your spouse (or former spouse). File an amended tax return for 2011 For the definition of erroneous items, see Erroneous Items earlier under Innocent Spouse Relief. File an amended tax return for 2011 Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. File an amended tax return for 2011 See Transfers of Property To Avoid Tax , later. File an amended tax return for 2011 Actual Knowledge The relief discussed here does not apply to any part of the understated tax due to your spouse's (or former spouse's) erroneous items of which you had actual knowledge. File an amended tax return for 2011 You and your spouse (or former spouse) remain jointly and severally liable for this part of the understated tax. File an amended tax return for 2011 If you had actual knowledge of only a portion of an erroneous item, the IRS will not grant relief for that portion of the item. File an amended tax return for 2011 You had actual knowledge of an erroneous item if: You knew that an item of unreported income was received. File an amended tax return for 2011 (This rule applies whether or not there was a receipt of cash. File an amended tax return for 2011 ) You knew of the facts that made an incorrect deduction or credit unallowable. File an amended tax return for 2011 For a false or inflated deduction, you knew that the expense was not incurred, or not incurred to the extent shown on the tax return. File an amended tax return for 2011 Knowledge of the source of an erroneous item is not sufficient to establish actual knowledge. File an amended tax return for 2011 Also, your actual knowledge may not be inferred when you merely had a reason to know of the erroneous item. File an amended tax return for 2011 Similarly, the IRS does not have to establish that you knew of the source of an erroneous item in order to establish that you had actual knowledge of the item itself. File an amended tax return for 2011 Your actual knowledge of the proper tax treatment of an erroneous item is not relevant for purposes of demonstrating that you had actual knowledge of that item. File an amended tax return for 2011 Neither is your actual knowledge of how the erroneous item was treated on the tax return. File an amended tax return for 2011 For example, if you knew that your spouse received dividend income, relief is not available for that income even if you did not know it was taxable. File an amended tax return for 2011 Example. File an amended tax return for 2011 Bill and Karen Green filed a joint return showing Karen's wages of $50,000 and Bill's self-employment income of $10,000. File an amended tax return for 2011 The IRS audited their return and found that Bill did not report $20,000 of self-employment income. File an amended tax return for 2011 The additional income resulted in a $6,000 understated tax, plus interest and penalties. File an amended tax return for 2011 After obtaining a legal separation from Bill, Karen filed Form 8857 to request separation of liability relief. File an amended tax return for 2011 The IRS proved that Karen actually knew about the $20,000 of additional income at the time she signed the joint return. File an amended tax return for 2011 Bill is liable for all of the understated tax, interest, and penalties because all of it was due to his unreported income. File an amended tax return for 2011 Karen is also liable for the understated tax, interest, and penalties due to the $20,000 of unreported income because she actually knew of the item. File an amended tax return for 2011 The IRS can collect the entire $6,000 plus interest and penalties from either Karen or Bill because they are jointly and individually liable for it. File an amended tax return for 2011 Factors supporting actual knowledge. File an amended tax return for 2011   The IRS may rely on all facts and circumstances in determining whether you actually knew of an erroneous item at the time you signed the return. File an amended tax return for 2011 The following are examples of factors the IRS may use. File an amended tax return for 2011 Whether you made a deliberate effort to avoid learning about the item in order to be shielded from liability. File an amended tax return for 2011 Whether you and your spouse (or former spouse) jointly owned the property that resulted in the erroneous item. File an amended tax return for 2011 Exception for spousal abuse or domestic violence. File an amended tax return for 2011   Even if you had actual knowledge, you may still qualify for relief if you establish that: You were the victim of spousal abuse or domestic violence before signing the return, and Because of that abuse, you did not challenge the treatment of any items on the return because you were afraid your spouse (or former spouse) would retaliate against you. File an amended tax return for 2011   If you establish that you signed your joint return under duress (threat of harm or other form of coercion), then it is not a joint return, and you are not liable for any tax shown on that return or any tax deficiency for that return. File an amended tax return for 2011 However, you may be required to file a separate return for that tax year. File an amended tax return for 2011 For more information about duress, see the instructions for Form 8857. File an amended tax return for 2011 Transfers of Property To Avoid Tax If your spouse (or former spouse) transfers property (or the right to property) to you for the main purpose of avoiding tax or payment of tax, the tax liability allocated to you will be increased by the fair market value of the property on the date of the transfer. File an amended tax return for 2011 The increase may not be more than the entire amount of the liability. File an amended tax return for 2011 A transfer will be presumed to have as its main purpose the avoidance of tax or payment of tax if the transfer is made after the date that is 1 year before the date on which the IRS sent its first letter of proposed deficiency. File an amended tax return for 2011 This presumption will not apply if: The transfer was made under a divorce decree, separate maintenance agreement, or a written instrument incident to such an agreement, or You establish that the transfer did not have as its main purpose the avoidance of tax or payment of tax. File an amended tax return for 2011 If the presumption does not apply, but the IRS can establish that the purpose of the transfer was the avoidance of tax or payment of tax, the tax liability allocated to you will be increased as explained above. File an amended tax return for 2011 Equitable Relief If you do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law, you may still be relieved of responsibility for tax, interest, and penalties through equitable relief. File an amended tax return for 2011 Unlike innocent spouse relief or separation of liability relief, you can get equitable relief from an understated tax (defined earlier under Innocent Spouse Relief ) or an underpaid tax. File an amended tax return for 2011 An underpaid tax is an amount of tax you properly reported on your return but you have not paid. File an amended tax return for 2011 For example, your joint 2009 return shows that you and your spouse owed $5,000. File an amended tax return for 2011 You paid $2,000 with the return. File an amended tax return for 2011 You have an underpaid tax of $3,000. File an amended tax return for 2011 Conditions for Getting Equitable Relief You may qualify for equitable relief if you meet all of the following conditions. File an amended tax return for 2011 You are not eligible for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. File an amended tax return for 2011 You have an understated tax or an underpaid tax. File an amended tax return for 2011 You did not pay the tax. File an amended tax return for 2011 However, see Refunds , later, for situations in which you are entitled to a refund of payments you made. File an amended tax return for 2011 You establish that, taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated or underpaid tax. File an amended tax return for 2011 See Factors for Determining Whether To Grant Equitable Relief, later. File an amended tax return for 2011 You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. File an amended tax return for 2011 A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. File an amended tax return for 2011 Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. File an amended tax return for 2011 See Transfers of Property To Avoid Tax, earlier, under Separation of Liability Relief. File an amended tax return for 2011 You did not file or fail to file your return with the intent to commit fraud. File an amended tax return for 2011 The income tax liability from which you seek relief must be attributable to an item of the spouse (or former spouse) with whom you filed the joint return, unless one of the following exceptions applies: The item is attributable or partially attributable to you solely due to the operation of community property law. File an amended tax return for 2011 If you meet this exception, that item will be considered attributable to your spouse (or former spouse) for purposes of equitable relief. File an amended tax return for 2011 If the item is titled in your name, the item is presumed to be attributable to you. File an amended tax return for 2011 However, you can rebut this presumption based on the facts and circumstances. File an amended tax return for 2011 You did not know, and had no reason to know, that funds intended for the payment of tax were misappropriated by your spouse (or former spouse) for his or her benefit. File an amended tax return for 2011 If you meet this exception, the IRS will consider granting equitable relief although the underpaid tax may be attributable in part or in full to your item, and only to the extent the funds intended for payment were taken by your spouse (or former spouse). File an amended tax return for 2011 You establish that you were the victim of spousal abuse or domestic violence before signing the return, and that, as a result of the prior abuse, you did not challenge the treatment of any items on the return for fear of your spouse's (or former spouse's) retaliation. File an amended tax return for 2011 If you meet this exception, relief will be considered although the understated tax or underpaid tax may be attributable in part or in full to your item. File an amended tax return for 2011 Factors for Determining Whether To Grant Equitable Relief The IRS will consider all of the facts and circumstances in order to determine whether it is unfair to hold you responsible for the understated or underpaid tax. File an amended tax return for 2011 The following are examples of factors that the IRS will consider to determine whether to grant equitable relief. File an amended tax return for 2011 The IRS will consider all factors and weigh them appropriately. File an amended tax return for 2011 Relevant Factors The following are examples of factors that may be relevant to whether the IRS will grant equitable relief. File an amended tax return for 2011 Whether you are separated (whether legally or not) or divorced from your spouse. File an amended tax return for 2011 A temporary absence, such as an absence due to imprisonment, illness, business, vacation, military service, or education, is not considered separation for this purpose. File an amended tax return for 2011 A temporary absence is one where it is reasonable to assume that the absent spouse will return to the household, and the household or a substantially equivalent household is maintained in anticipation of the absent spouse's return. File an amended tax return for 2011 Whether you would suffer a significant economic hardship if relief is not granted. File an amended tax return for 2011 (In other words, you would not be able to pay your reasonable basic living expenses. File an amended tax return for 2011 ) Whether you have a legal obligation under a divorce decree or agreement to pay the tax. File an amended tax return for 2011 This factor will not weigh in favor of relief if you knew or had reason to know, when entering into the divorce decree or agreement, that your former spouse would not pay the income tax liability. File an amended tax return for 2011 Whether you received a significant benefit (beyond normal support) from the underpaid tax or item causing the understated tax. File an amended tax return for 2011 (For a definition of significant benefit, see Indications of Unfairness for Innocent Spouse Relief earlier. File an amended tax return for 2011 ) Whether you have made a good faith effort to comply with federal income tax laws for the tax year for which you are requesting relief or the following years. File an amended tax return for 2011 Whether you knew or had reason to know about the items causing the understated tax or that the tax would not be paid, as explained next. File an amended tax return for 2011 Knowledge or reason to know. File an amended tax return for 2011   In the case of an underpaid tax, the IRS will consider whether you did not know and had no reason to know that your spouse (or former spouse) would not pay the income tax liability. File an amended tax return for 2011   In the case of an income tax liability that arose from an understated tax, the IRS will consider whether you did not know and had no reason to know of the item causing the understated tax. File an amended tax return for 2011 Reason to know of the item giving rise to the understated tax will not be weighed more heavily than other factors. File an amended tax return for 2011 Actual knowledge of the item giving rise to the understated tax, however, is a strong factor weighing against relief. File an amended tax return for 2011 This strong factor may be overcome if the factors in favor of equitable relief are particularly compelling. File an amended tax return for 2011 Reason to know. File an amended tax return for 2011   In determining whether you had reason to know, the IRS will consider your level of education, any deceit or evasiveness of your spouse (or former spouse), your degree of involvement in the activity generating the income tax liability, your involvement in business and household financial matters, your business or financial expertise, and any lavish or unusual expenditures compared with past spending levels. File an amended tax return for 2011 Example. File an amended tax return for 2011 You and your spouse filed a joint 2009 return. File an amended tax return for 2011 That return showed you owed $10,000. File an amended tax return for 2011 You had $5,000 of your own money and you took out a loan to pay the other $5,000. File an amended tax return for 2011 You gave 2 checks for $5,000 each to your spouse to pay the $10,000 liability. File an amended tax return for 2011 Without telling you, your spouse took the $5,000 loan and spent it on himself. File an amended tax return for 2011 You and your spouse were divorced in 2010. File an amended tax return for 2011 In addition, you had no knowledge or reason to know at the time you signed the return that the tax would not be paid. File an amended tax return for 2011 These facts indicate to the IRS that it may be unfair to hold you liable for the $5,000 underpaid tax. File an amended tax return for 2011 The IRS will consider these facts, together with all of the other facts and circumstances, to determine whether to grant you equitable relief from the $5,000 underpaid tax. File an amended tax return for 2011 Factors Weighing in Favor of Equitable Relief The following are examples of factors that will weigh in favor of equitable relief, but will not weigh against equitable relief. File an amended tax return for 2011 Whether your spouse (or former spouse) abused you. File an amended tax return for 2011 Whether you were in poor mental or physical health on the date you signed the return or at the time you requested relief. File an amended tax return for 2011 Refunds If you are granted relief, refunds are: Permitted under innocent spouse relief as explained later under Limit on Amount of Refund . File an amended tax return for 2011 Not permitted under separation of liability relief. File an amended tax return for 2011 Permitted in limited circumstances under equitable relief, as explained under Refunds Under Equitable Relief. File an amended tax return for 2011 Proof Required The IRS will only refund payments you made with your own money. File an amended tax return for 2011 However, you must provide proof that you made the payments with your own money. File an amended tax return for 2011 Examples of proof are a copy of your bank statement or a canceled check. File an amended tax return for 2011 No proof is required if your individual refund was used by the IRS to pay a tax you owed on a joint tax return for another year. File an amended tax return for 2011 Refunds Under Equitable Relief In the following situations, you are eligible to receive a refund of certain payments you made. File an amended tax return for 2011 Underpaid tax. File an amended tax return for 2011   If you are granted relief for an underpaid tax, you are eligible for a refund of separate payments that you made after July 22, 1998. File an amended tax return for 2011 However, you are not eligible for refunds of payments made with the joint return, joint payments, or payments that your spouse (or former spouse) made. File an amended tax return for 2011 For example, withholding tax and estimated tax payments cannot be refunded because they are considered made with the joint return. File an amended tax return for 2011   The amount of the refund is subject to the limit discussed later under Limit on Amount of Refund. File an amended tax return for 2011 Understated tax. File an amended tax return for 2011   If you are granted relief for an understated tax, you are eligible for a refund of certain payments made under an installment agreement that you entered into with the IRS, if you have not defaulted on the installment agreement. File an amended tax return for 2011 You are not in default if the IRS did not issue you a notice of default or take any action to end the installment agreement. File an amended tax return for 2011 Only installment payments made after the date you filed Form 8857 are eligible for a refund. File an amended tax return for 2011   The amount of the refund is subject to the limit discussed next. File an amended tax return for 2011 Limit on Amount of Refund The amount of your refund is limited. File an amended tax return for 2011 Read the following chart to find out the limit. File an amended tax return for 2011 IF you file Form 8857. File an amended tax return for 2011 . File an amended tax return for 2011 . File an amended tax return for 2011 THEN the refund cannot be more than. File an amended tax return for 2011 . File an amended tax return for 2011 . File an amended tax return for 2011 Within 3 years after filing your return The part of the tax paid within 3 years (plus any extension of time for filing your return) before you filed Form 8857. File an amended tax return for 2011 After the 3-year period, but within 2 years from the time you paid the tax The tax you paid within 2 years immediately before you filed Form 8857. File an amended tax return for 2011 Filled-in Form 8857 This part explains how Janie Boulder fills out Form 8857 to request innocent spouse relief. File an amended tax return for 2011 Janie and Joe Boulder filed a joint tax return for 2007. File an amended tax return for 2011 They claimed one dependency exemption for their son Michael. File an amended tax return for 2011 Their return was adjusted by the IRS because Joe did not report a $5,000 award he won that year. File an amended tax return for 2011 Janie did not know about the award when the return was filed. File an amended tax return for 2011 They agreed to the adjustment but could not pay the additional amount due of $815 ($650 tax + $165 penalty and interest). File an amended tax return for 2011 Janie and Joe were divorced on May 13, 2009. File an amended tax return for 2011 In February 2010, Janie filed her 2009 federal income tax return as head of household. File an amended tax return for 2011 She expected a refund of $1,203. File an amended tax return for 2011 In May 2010, she received a notice informing her that the IRS had offset her refund against the $815 owed on her joint 2007 income tax return and that she had a right to file Form 8857. File an amended tax return for 2011 Janie applies the conditions listed earlier under Innocent Spouse Relief to see if she qualifies for relief. File an amended tax return for 2011 Janie meets the first and second conditions because the joint tax return they filed has an understated tax due to Joe's erroneous item. File an amended tax return for 2011 Janie believes she meets the third condition. File an amended tax return for 2011 She did not know about the award and had no reason to know about it because of the secretive way Joe conducted his financial affairs. File an amended tax return for 2011 Janie believes she meets the fourth condition. File an amended tax return for 2011 She believes it would be unfair to be held liable for the tax because she did not benefit from the award. File an amended tax return for 2011 Joe spent it on personal items for his use only. File an amended tax return for 2011 Because Janie believes she qualifies for innocent spouse relief, she first completes Part I of Form 8857 to determine if she should file the form. File an amended tax return for 2011 In Part I, she makes all entries under the Tax Year 1 column because she is requesting relief for only one year. File an amended tax return for 2011 Part I Line 1. File an amended tax return for 2011   She enters “2007” on line 1 because this is the tax year for which she is requesting relief. File an amended tax return for 2011 Line 2. File an amended tax return for 2011   She checks the box because she wants a refund. File an amended tax return for 2011 Note. File an amended tax return for 2011 Because the IRS used her individual refund to pay the tax owed on the joint tax return, she does not need to provide proof of payment. File an amended tax return for 2011 Line 3. File an amended tax return for 2011   She checks the “No” box because the IRS did not use her share of a joint refund to pay Joe's past-due debts. File an amended tax return for 2011 Line 4. File an amended tax return for 2011   She checks the “Yes” box because she filed a joint tax return for tax year 2007. File an amended tax return for 2011 Line 5. File an amended tax return for 2011   She skips this line because she checked the “Yes” box on line 4. File an amended tax return for 2011 Part II Line 6. File an amended tax return for 2011   She enters her name, address, social security number, county, and best daytime phone number. File an amended tax return for 2011 Part III Line 7. File an amended tax return for 2011   She enters Joe's name, address, social security number, and best daytime phone number. File an amended tax return for 2011 Line 8. File an amended tax return for 2011   She checks the “divorced since” box and enters the date she was divorced as “05/13/2009. File an amended tax return for 2011 ” She attaches a copy of her entire divorce decree (not Illustrated) to the form. File an amended tax return for 2011 Line 9. File an amended tax return for 2011   She checks the box for “High school diploma, equivalent, or less,” because she had completed high school when her 2007 joint tax return was filed. File an amended tax return for 2011 Line 10. File an amended tax return for 2011   She checks the “No” box because she was not a victim of spousal abuse or domestic violence. File an amended tax return for 2011 Line 11. File an amended tax return for 2011   She checks the “No” box because neither she nor Joe incurred any large expenses during the year for which she wants relief. File an amended tax return for 2011 Line 12. File an amended tax return for 2011   She checks the “Yes” box because she signed the 2007 joint tax return. File an amended tax return for 2011 Line 13. File an amended tax return for 2011   She checks the “No” box because she did not have a mental or physical condition when the return was filed and does not have one now. File an amended tax return for 2011 Part IV Line 14. File an amended tax return for 2011   Because she was not involved in preparing the return, she checks the box, “You were not involved in preparing the returns. File an amended tax return for 2011 ” Line 15. File an amended tax return for 2011   She checks the box, “You did not know anything was incorrect or missing” because she did not know that Joe had received a $5,000 award. File an amended tax return for 2011 She explains this in the space provided. File an amended tax return for 2011 Line 16. File an amended tax return for 2011   She checks the box, “You knew that person had income” because she knew Joe had income from wages. File an amended tax return for 2011 She also lists Joe's income. File an amended tax return for 2011 Under “Type of Income” she enters “wages. File an amended tax return for 2011 ” Under “Who paid it to that person,” she enters the name of Joe's employer, “Allied. File an amended tax return for 2011 ” Under “Tax Year 1” she enters the amount of Joe's wages, “$40,000. File an amended tax return for 2011 ” Because she is only requesting relief for one tax year, she leaves the entry spaces for “Tax Year 2” and “Tax Year 3” blank. File an amended tax return for 2011 Line 17. File an amended tax return for 2011   She checks the “No” box because she did not know any amount was owed to the IRS when the 2007 return was signed. File an amended tax return for 2011 Line 18. File an amended tax return for 2011   She checks the “No” box because, when the return was signed, she was not having financial problems. File an amended tax return for 2011 Line 19. File an amended tax return for 2011   She checks the box, “You were not involved in handling money for the household” because Joe handled all the money for the household. File an amended tax return for 2011 She provides additional information in the space provided. File an amended tax return for 2011 Line 20. File an amended tax return for 2011   She checks the “No” box because Joe has never transferred money or property to her. File an amended tax return for 2011 Part V Line 21. File an amended tax return for 2011   She enters the number “1” on both the line for “Adults” and the line for “Children” because her current household consists of herself and her son. File an amended tax return for 2011 Line 22. File an amended tax return for 2011   She enters her average monthly income for her entire household. File an amended tax return for 2011 Line 23. File an amended tax return for 2011   She lists her assets, which are $500 for the fair market value of a car, $450 in her checking account, and $100 in her savings account. File an amended tax return for 2011 Signing and mailing Form 8857. File an amended tax return for 2011    Janie signs and dates the form. File an amended tax return for 2011 She attaches the copy of her divorce decree (not illustrated) required by line 8. File an amended tax return for 2011 Finally, she sends the form to the IRS address or fax number shown in the instructions for Form 8857. File an amended tax return for 2011 This image is too large to be displayed in the current screen. File an amended tax return for 2011 Please click the link to view the image. File an amended tax return for 2011 Boulder's filled-in Form 8857 page 1 This image is too large to be displayed in the current screen. File an amended tax return for 2011 Please click the link to view the image. File an amended tax return for 2011 Boulder's filled-in Form 8857 page 2 This image is too large to be displayed in the current screen. File an amended tax return for 2011 Please click the link to view the image. File an amended tax return for 2011 Boulder's filled-in Form 8857 page 3 This image is too large to be displayed in the current screen. File an amended tax return for 2011 Please click the link to view the image. File an amended tax return for 2011 Boulder's filled-in Form 8857 page 4 Flowcharts The following flowcharts provide a quick way for determining whether you may qualify for relief. File an amended tax return for 2011 But do not rely on these flowcharts alone. File an amended tax return for 2011 Also read the earlier discussions. File an amended tax return for 2011 Figure A. File an amended tax return for 2011 Do You Qualify for Innocent Spouse Relief? Please click here for the text description of the image. File an amended tax return for 2011 "Do You Qualify for Innocent Spouse Relief?" Figure B. File an amended tax return for 2011 Do You Qualify for Separation of Liability Relief? Please click here for the text description of the image. File an amended tax return for 2011 "Do You Qualify for Separation of Liability Relief?" Figure C. File an amended tax return for 2011 Do You Qualify for Equitable Relief? This image is too large to be displayed in the current screen. File an amended tax return for 2011 Please click the link to view the image. File an amended tax return for 2011 "Do You Qualify for Equitable Relief?" Prev  Up  Next   Home   More Online Publications