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Free Income Tax

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Free Income Tax

Free income tax Index A Accelerated Cost Recovery System (ACRS), MACRS Depreciation (see also Modified Accelerated Cost Recovery System (MACRS)) Effective date, Depreciation Methods Accounting methods Accrual method, Accrual method. Free income tax Cash method, Cash method. Free income tax Change of method, Changing your accounting method. Free income tax Constructive receipt of income, Cash method. Free income tax , More information. Free income tax Accrual method taxpayers, Accrual method. Free income tax ACRS (Accelerated Cost Recovery System) Effective date, Depreciation Methods Active participation, Active participation. Free income tax Activities not for profit, Duplex. Free income tax Additions to property, Additions or improvements to property. Free income tax (see also Improvements) Basis, Increases to basis. Free income tax , Additions or improvements. Free income tax MACRS recovery period, Additions or improvements to property. Free income tax Adjusted basis MACRS depreciation, Adjusted Basis Adjusted gross income (AGI) Modified (see Modified adjusted gross income (MAGI)) Advance rent, Advance rent. Free income tax Security deposits, Security deposits. Free income tax Advertising, Types of Expenses Allocation of expenses Change of property to rental use, Payments added to capital account. Free income tax How to divide expenses, Dividing Expenses Part of property rented, Renting Part of Property, How to divide expenses. Free income tax Personal use of rental property, Personal use of rental property. Free income tax , Personal Use of Dwelling Unit (Including Vacation Home) Alternative Depreciation System (ADS) Election of, Electing ADS MACRS, MACRS Depreciation, Table 2-2d. Free income tax Alternative minimum tax (AMT) Accelerated depreciation methods, Alternative minimum tax (AMT). Free income tax Amended returns, Filing an amended return. Free income tax Apartments Basement apartments, Examples. Free income tax Dwelling units, Dwelling unit. Free income tax Appraisal fees, Settlement fees and other costs. Free income tax Assessments for maintenance, Assessments for local improvements. Free income tax Assessments, local (see Local assessments) Assistance (see Tax help) Assumption of mortgage, Assumption of a mortgage. Free income tax Attorneys' fees, Settlement fees and other costs. Free income tax , Increases to basis. Free income tax Automobiles MACRS recovery periods, Property Classes Under GDS B Basis Adjusted basis, Adjusted Basis Assessments for local improvements, Assessments for local improvements. Free income tax Basis other than cost, Basis Other Than Cost Cost basis, Cost Basis Decreases to, Decreases to basis. Free income tax Deductions Capitalization of costs vs. Free income tax , Deducting vs. Free income tax capitalizing costs. Free income tax Not greater than basis, Cost or Other Basis Fully Recovered Fair market value, Fair market value. Free income tax Increases to, Increases to basis. Free income tax MACRS depreciable basis, Basis of Depreciable Property Property changed to rental use, Basis of Property Changed to Rental Use C Capital expenditures Deductions vs. Free income tax effect on basis, Deducting vs. Free income tax capitalizing costs. Free income tax Local benefit taxes, Local benefit taxes. Free income tax Mortgages, payments to obtain, Expenses paid to obtain a mortgage. Free income tax Cars MACRS recovery periods, Property Classes Under GDS Cash method taxpayers, Cash method. Free income tax Casualty losses, Exception for Rental Real Estate With Active Participation Change of accounting method, Changing your accounting method. Free income tax Charitable contributions Use of property, Donation of use of the property. Free income tax Cleaning and maintenance, Types of Expenses Closing costs, Settlement fees and other costs. Free income tax Commissions, Types of Expenses Computers MACRS recovery periods, Property Classes Under GDS Condominiums, Condominiums, Dwelling unit. Free income tax Constructive receipt of income, Cash method. Free income tax , More information. Free income tax Cooperative housing, Cooperative apartments. Free income tax , Cooperatives, Dwelling unit. Free income tax Cost basis, Cost Basis Credit reports, Settlement fees and other costs. Free income tax Credits Residential energy credits, Decreases to basis. Free income tax D Days of personal use, What is a day of personal use? Days used for repairs and maintenance, Days used for repairs and maintenance. Free income tax Deductions Capitalizing costs vs. Free income tax effect on basis, Deducting vs. Free income tax capitalizing costs. Free income tax Depreciation (see Depreciation) Limitations on, Form 4562. Free income tax Passive activity losses (see Passive activity) Depreciation, Depreciation of Rental Property, Changing your accounting method. Free income tax Alternative Depreciation System (ADS) (see Modified Accelerated Cost Recovery System (MACRS)) Basis (see Basis) Change of accounting method, Changing your accounting method. Free income tax Change of property to rental use, Property Changed to Rental Use Claiming correct amount of, Claiming the Correct Amount of Depreciation Declining balance method, Depreciation Methods Duration of property expected to last more than one year, What Rental Property Can Be Depreciated? Eligible property, What Rental Property Can Be Depreciated? First-year expensing, Section 179 deduction. Free income tax MACRS (see Modified Accelerated Cost Recovery System (MACRS)) Methods, Depreciation Methods, Figuring Your Depreciation Deduction Ownership of property, What Rental Property Can Be Depreciated?, Property you own. Free income tax Rental expense, Depreciation. Free income tax Rented property, Rented property. Free income tax Section 179 deduction, Section 179 deduction. Free income tax Special depreciation allowances, Claiming the Special Depreciation Allowance Straight line method, Depreciation Methods Useful life, What Rental Property Can Be Depreciated?, Property having a determinable useful life. Free income tax Vacant rental property, Vacant rental property. Free income tax Discount, bonds and notes issued at (see Original issue discount (OID)) Dividing of expenses (see Allocation of expenses) Dwelling units Definition, Dwelling unit. Free income tax Fair rental price, Fair rental price. Free income tax Personal use of, Personal Use of Dwelling Unit (Including Vacation Home), What is a day of personal use? E Easements, Decreases to basis. Free income tax Equipment rental expense, Rental of equipment. Free income tax F Fair market value (FMV), Fair market value. Free income tax Fair rental price, Dividing Expenses, Fair rental price. Free income tax Fees Loan origination fees, Points, Settlement fees and other costs. Free income tax Points (see Points) Settlement fees and other costs, Settlement fees and other costs. Free income tax Tax return preparation fees, Legal and other professional fees. Free income tax First-year expensing, Section 179 deduction. Free income tax Form 1040 Not rented for profit income, Where to report. Free income tax Part of property rented, Renting Part of Property Rental income and expenses, Reporting Rental Income, Expenses, and Losses Schedule E, Schedule E (Form 1040) Form 1098 Mortgage interest, Form 1098, Mortgage Interest Statement. Free income tax Form 4684 Casualties and thefts, How to report. Free income tax Form 4797 Sales of business property, How to report. Free income tax Form 8582 Passive activity losses, Form 8582. Free income tax , Form 8582 not required. Free income tax Free tax services, Free help with your tax return. Free income tax G Gains and losses At-risk rules, At-Risk Rules Casualty and theft losses, Exception for Rental Real Estate With Active Participation Limits on rental losses, Form 4562. Free income tax Passive activity losses, Passive Activity Limits Rental real estate activities, Exception for Rental Real Estate With Active Participation Sale of rental property, Sale or exchange of rental property. Free income tax , How to report. Free income tax General depreciation system (GDS) (see Modified Accelerated Cost Recovery System (MACRS)) H Help (see Tax help) Home Main home, Main home. Free income tax Use as rental property (see Use of home) I Improvements, Table 1-1. Free income tax Examples of Improvements (see also Repairs) Assessments for local improvements, Assessments for local improvements. Free income tax Basis, Increases to basis. Free income tax , Additions or improvements. Free income tax Depreciation of rented property, Rented property. Free income tax MACRS recovery period, Additions or improvements to property. Free income tax Insurance, Types of Expenses Casualty or theft loss payments, Decreases to basis. Free income tax Change of property to rental use, Property Changed to Rental Use Fire insurance premiums, cost basis, Settlement fees and other costs. Free income tax Part of property rented, Renting Part of Property Premiums paid in advance, Insurance premiums paid in advance. Free income tax Title insurance, cost basis, Settlement fees and other costs. Free income tax Interest payments, Interest expense. Free income tax (see also Mortgages) Loan origination fees, Points Rental expenses, Types of Expenses L Land Cost basis, Separating cost of land and buildings. Free income tax Depreciation, Land. Free income tax Leases Cancellation payments, Canceling a lease. Free income tax Equipment leasing, Rental of equipment. Free income tax Limits Passive activity losses and credits, Passive Activity Limits Rental losses, Limits on Rental Losses Loans Assumption fees, Settlement fees and other costs. Free income tax Charges connected with getting or refinancing, cost basis, Settlement fees and other costs. Free income tax Low or no interest, Loans with low or no interest. Free income tax Origination fees, Points Local assessments, Assessments for local improvements. Free income tax Losses (see Gains and losses) M Missing children, photographs of, Reminders Modified Accelerated Cost Recovery System (MACRS), MACRS Depreciation, Figuring MACRS Depreciation Under ADS Additions or improvements to property, Additions or improvements to property. Free income tax Adjusted basis, Adjusted Basis Alternative Depreciation System (ADS), MACRS Depreciation, Figuring MACRS Depreciation Under ADS Basis other than cost, Basis Other Than Cost Conventions, Conventions Cost basis, Cost Basis Depreciable basis, Basis of Depreciable Property Effective date, Depreciation Methods Excluded property, Excluded Property General Depreciation System (GDS), MACRS Depreciation, Property Classes Under GDS, Figuring Your Depreciation Deduction Nonresidential rental property, Property Classes Under GDS Property used in rental activities (Table 2-1), Table 2-1. Free income tax MACRS Recovery Periods for Property Used in Rental Activities Recovery periods, Table 2-1. Free income tax MACRS Recovery Periods for Property Used in Rental Activities, 5-, 7-, or 15-year property. Free income tax Residential rental property, Property Classes Under GDS, Residential rental property. Free income tax Special depreciation allowances, Claiming the Special Depreciation Allowance Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Free income tax Mortgages, Expenses paid to obtain a mortgage. Free income tax Assumption of, cost basis, Assumption of a mortgage. Free income tax Change of property to rental use, Property Changed to Rental Use End of, OID, Loan or mortgage ends. Free income tax Interest, Interest expense. Free income tax , Property Changed to Rental Use, Renting Part of Property Mortgage insurance premiums, Settlement fees and other costs. Free income tax Part of property rented, Renting Part of Property N Nonresidential real property, Property Classes Under GDS Not-for-profit activities, Duplex. Free income tax O Original issue discount (OID), Points, Loan or mortgage ends. Free income tax P Part interest Expenses, Part interest. Free income tax Income, Part interest. Free income tax Passive activity Maximum special allowance, Maximum special allowance. Free income tax Personal property Rental income from, Property or services. Free income tax Personal use of rental property, Payments added to capital account. Free income tax , Personal Use of Dwelling Unit (Including Vacation Home) (see also Property changed to rental use) Placed-in-service date, Placed in Service Points, Types of Expenses, Points, Settlement fees and other costs. Free income tax Pre-rental expenses, Pre-rental expenses. Free income tax Principal residence (see Home) Profit, property not rented for, Duplex. Free income tax Property changed to rental use, Payments added to capital account. Free income tax Basis, Basis of Property Changed to Rental Use Publications (see Tax help) R Real estate professionals, Real estate professionals. Free income tax Real estate taxes, Real estate taxes. Free income tax Real property trades or businesses, Real property trades or businesses. Free income tax Recordkeeping requirements Travel and transportation expenses, Local transportation expenses. Free income tax , Travel expenses. Free income tax Recovery periods, Property Classes Under GDS Rent, Settlement fees and other costs. Free income tax Advance rent, Advance rent. Free income tax Fair price, Fair rental price. Free income tax Rental expenses, Rental Expenses Advertising, Types of Expenses Allocation between rental and personal uses, Dividing Expenses Change of property to rental use, Property Changed to Rental Use Cleaning and maintenance, Types of Expenses Commissions, Types of Expenses Depreciation, Depreciation. Free income tax Dwelling unit used as home, Dwelling Unit Used as a Home Equipment rental, Rental of equipment. Free income tax Home, property also used as, Rental of property also used as your home. Free income tax Improvements, Table 1-1. Free income tax Examples of Improvements Insurance, Types of Expenses, Insurance premiums paid in advance. Free income tax Interest payments, Types of Expenses, Interest expense. Free income tax Local transportation expenses, Types of Expenses, Local transportation expenses. Free income tax Part of property rented, Renting Part of Property Points, Types of Expenses, Points Pre-rental expenses, Pre-rental expenses. Free income tax Rental payments, Types of Expenses Repairs, Types of Expenses, Repairs and Improvements Sale of property, Vacant while listed for sale. Free income tax Tax return preparation fees, Legal and other professional fees. Free income tax Taxes, Types of Expenses Tenant, paid by, Expenses paid by tenant. Free income tax Travel expenses, Types of Expenses Utilities, Types of Expenses Vacant rental property, Vacant rental property. Free income tax Rental income Advance rent, Advance rent. Free income tax Cancellation of lease payments, Canceling a lease. Free income tax Dwelling unit used as home, Dwelling Unit Used as a Home Lease with option to buy, Lease with option to buy. Free income tax Not rented for profit, Not Rented for Profit Part interest, Part interest. Free income tax Property received from tenant, Property or services. Free income tax Reporting, Accrual method. Free income tax , Which Forms To Use Security deposit, Security deposits. Free income tax Services received from tenant, Property or services. Free income tax Uncollected rent, Uncollected rent. Free income tax Used as home, Rental of property also used as your home. Free income tax Rental losses, Exception for Rental Real Estate With Active Participation (see also Gains and losses) (see also Passive activity) Repairs, Types of Expenses, Repairs and Improvements (see also Improvements) Assessments for maintenance, Assessments for local improvements. Free income tax Personal use of rental property exception for days used for repairs and maintenance, Days used for repairs and maintenance. Free income tax S Sale of property Expenses, Vacant while listed for sale. Free income tax Gain or loss, Sale or exchange of rental property. Free income tax , How to report. Free income tax Main home, Sale of main home used as rental property. Free income tax Section 179 deductions, Section 179 deduction. Free income tax Security deposits, Security deposits. Free income tax Settlement fees, Settlement fees and other costs. Free income tax Shared equity financing agreements, Shared equity financing agreement. Free income tax Special depreciation allowances, Claiming the Special Depreciation Allowance Spouse Material participation, Participating spouse. Free income tax Standard mileage rates, Local transportation expenses. Free income tax Surveys, Settlement fees and other costs. Free income tax T Tables and figures Improvements, examples of (Table 1-1), Table 1-1. Free income tax Examples of Improvements MACRS optional tables (Table 2-2d), Table 2-2d. Free income tax MACRS optional tables (Tables 2-2a, 2-2b, and 2-2c), Tables 2-2a, 2-2b, and 2-2c. Free income tax MACRS recovery periods for property used in rental activities (Table 2-1), Table 2-1. Free income tax MACRS Recovery Periods for Property Used in Rental Activities Tax credits Residential energy credits, effect on basis, Decreases to basis. Free income tax Tax help, How To Get Tax Help Tax return preparation fees, Legal and other professional fees. Free income tax Taxes Deduction of, Types of Expenses Local benefit taxes, Local benefit taxes. Free income tax Real estate taxes, Real estate taxes. Free income tax Transfer taxes, Settlement fees and other costs. Free income tax Theft losses, Theft. Free income tax Title insurance, Settlement fees and other costs. Free income tax Transfer taxes, Settlement fees and other costs. Free income tax Travel and transportation expenses Local transportation expenses, Types of Expenses, Local transportation expenses. Free income tax Recordkeeping, Travel expenses. Free income tax Rental expenses, Types of Expenses Standard mileage rate, Local transportation expenses. Free income tax U Uncollected rent Income, Uncollected rent. Free income tax Use of home Before or after renting, Days used as a main home before or after renting. Free income tax Change to rental use, Property Changed to Rental Use Days of personal use, What is a day of personal use? Fair rental price, Fair rental price. Free income tax Passive activity rules exception, Exception for Personal Use of Dwelling Unit Personal use as dwelling unit, Personal Use of Dwelling Unit (Including Vacation Home) Utilities, Types of Expenses, Increases to basis. Free income tax V Vacant rental property, Vacant rental property. Free income tax Vacation homes Dwelling unit, Dwelling unit. Free income tax Fair rental price, Fair rental price. Free income tax Personal use of, Personal Use of Dwelling Unit (Including Vacation Home) Valuation Fair market value, Fair market value. Free income tax Prev  Up     Home   More Online Publications
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The Free Income Tax

Free income tax Publication 971 - Main Content Table of Contents How To Request ReliefException for agreements relating to TEFRA partnership proceedings. Free income tax 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. Free income tax If you are requesting relief for more than three tax years, you must file an additional Form 8857. Free income tax The IRS will review your Form 8857 and let you know if you qualify. Free income tax A completed Form 8857 is shown later. Free income tax When to file Form 8857. Free income tax   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. Free income tax The following are some of the ways you may become aware of such a liability. Free income tax The IRS is examining your tax return and proposing to increase your tax liability. Free income tax The IRS sends you a notice. Free income tax   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. Free income tax (But see the exceptions below for different filing deadlines that apply. Free income tax ) For this reason, do not delay filing because you do not have all the documentation. Free income tax   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. Free income tax 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. Free income tax This includes the filing of a proof of claim in a bankruptcy proceeding. Free income tax The filing of a suit by the United States against you to collect the joint liability. Free income tax 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. Free income tax The collection-related notices include, but are not limited to, Letter 11 and Letter 1058. Free income tax Exception for equitable relief. Free income tax   On July 25, 2011, the IRS issued Notice 2011-70 (available at www. Free income tax irs. Free income tax gov/irb/2011-32_IRB/ar11. Free income tax html) expanding the amount of time to request equitable relief. Free income tax 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. Free income tax Generally, the IRS has 10 years from the date the tax liability was assessed to collect the tax. Free income tax In certain cases, the 10-year period is suspended. Free income tax The amount of time the suspension is in effect will extend the time the IRS has to collect the tax. Free income tax See Pub. Free income tax 594, The IRS Collection Process, for details. Free income tax 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. Free income tax 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. Free income tax See Pub. Free income tax 556, Examination of Returns, Appeal Rights, and Claims for Refund, for details. Free income tax 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. Free income tax Exception for relief based on community property laws. Free income tax   If you are requesting relief based on community property laws, a different filing deadline applies. Free income tax See Relief from liability arising from community property law discussed later under Community Property Laws . Free income tax Form 8857 filed by or on behalf of a decedent. Free income tax   An executor (including any other duly appointed representative) may pursue a Form 8857 filed during the decedent's lifetime. Free income tax An executor (including any other duly appointed representative) may also file Form 8857 as long as the decedent satisfied the eligibility requirements while alive. Free income tax 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. Free income tax Situations in which you are not entitled to relief. Free income tax   You are not entitled to innocent spouse relief for any tax year to which the following situations apply. Free income tax 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. Free income tax 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. Free income tax You entered into an offer in compromise with the IRS. Free income tax You entered into a closing agreement with the IRS that disposed of the same liability for which you want to seek relief. Free income tax Exception for agreements relating to TEFRA partnership proceedings. Free income tax   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. Free income tax (TEFRA is an acronym that refers to the “Tax Equity and Fiscal Responsibility Act of 1982” that prescribed the tax treatment of partnership items. Free income tax ) 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). Free income tax Transferee liability not affected by innocent spouse relief provisions. Free income tax   The innocent spouse relief provisions do not affect tax liabilities that arise under federal or state transferee liability or property laws. Free income tax 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. Free income tax Example. Free income tax Herb and Wanda timely filed their 2008 joint income tax return on April 15, 2009. Free income tax Herb died in March 2010, and the executor of Herb's will transferred all of the estate's assets to Wanda. Free income tax In August 2010, the IRS assessed a deficiency for the 2008 return. Free income tax The items causing the deficiency belong to Herb. Free income tax Wanda is relieved of the deficiency under the innocent spouse relief provisions, and Herb's estate remains solely liable for it. Free income tax However, the IRS may collect the deficiency from Wanda to the extent permitted under federal or state transferee liability or property laws. Free income tax The IRS Must Contact Your Spouse or Former Spouse By law, the IRS must contact your spouse or former spouse. Free income tax There are no exceptions, even for victims of spousal abuse or domestic violence. Free income tax We will inform your spouse or former spouse that you filed Form 8857 and will allow him or her to participate in the process. Free income tax 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. Free income tax 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. Free income tax If you petition the Tax Court (explained below), your spouse or former spouse may see your personal information. Free income tax 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. Free income tax The IRS sends you a final determination letter regarding your request for relief. Free income tax You do not receive a final determination letter from the IRS within six months from the date you filed Form 8857. Free income tax 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. Free income tax The United States Tax Court is an independent judicial body and is not part of the IRS. Free income tax You must file a petition with the United States Tax Court in order for it to review your request for relief. Free income tax You must file the petition no later than the 90th day after the date the IRS mails its final determination notice to you. Free income tax If you do not file a petition, or you file it late, the Tax Court cannot review your request for relief. Free income tax 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. Free income tax ustaxcourt. Free income tax 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. Free income tax Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free income tax Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free income tax 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. Free income tax 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. Free income tax 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. Free income tax You did not file a joint return for the tax year. Free income tax You did not include the item of community income in gross income. Free income tax 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. Free income tax Income your spouse (or former spouse) derived from a trade or business he or she operated as a sole proprietor. Free income tax Your spouse's (or former spouse's) distributive share of partnership income. Free income tax Income from your spouse's (or former spouse's) separate property (other than income described in (a), (b), or (c)). Free income tax Use the appropriate community property law to determine what is separate property. Free income tax Any other income that belongs to your spouse (or former spouse) under community property law. Free income tax You establish that you did not know of, and had no reason to know of, that community income. Free income tax See  Actual Knowledge or Reason To Know , below. Free income tax Under all facts and circumstances, it would not be fair to include the item of community income in your gross income. Free income tax See Indications of unfairness for liability arising from community property law, later. Free income tax Actual knowledge or reason to know. Free income tax   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. Free income tax Amount of community income unknown. Free income tax   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. Free income tax Not knowing the specific amount is not a basis for relief. Free income tax Reason to know. Free income tax   The IRS will consider all facts and circumstances in determining whether you had reason to know of an item of community income. Free income tax The facts and circumstances include: The nature of the item of community income and the amount of the item relative to other income items. Free income tax The financial situation of you and your spouse (or former spouse). Free income tax Your educational background and business experience. Free income tax 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). Free income tax Indications of unfairness for liability arising from community property law. Free income tax   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. Free income tax   The following are examples of factors the IRS will consider. Free income tax Whether you received a benefit, either directly or indirectly, from the omitted item of community income (defined below). Free income tax Whether your spouse (or former spouse) deserted you. Free income tax Whether you and your spouse have been divorced or separated. Free income tax  For other factors see Factors for Determining Whether To Grant Equitable Relief later. Free income tax Benefit from omitted item of community income. Free income tax   A benefit includes normal support, but does not include de minimis (small) amounts. Free income tax 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. Free income tax   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. Free income tax 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). Free income tax How and When To Request Relief You request relief by filing Form 8857, as discussed earlier. Free income tax Fill in Form 8857 according to the instructions. Free income tax 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. Free income tax 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. Free income tax 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. Free income tax 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. Free income tax Generally, the tax, interest, and penalties that qualify for relief can only be collected from your spouse (or former spouse). Free income tax However, you are jointly and individually responsible for any tax, interest, and penalties that do not qualify for relief. Free income tax The IRS can collect these amounts from either you or your spouse (or former spouse). Free income tax You must meet all of the following conditions to qualify for innocent spouse relief. Free income tax You filed a joint return. Free income tax There is an understated tax on the return that is due to erroneous items (defined later) of your spouse (or former spouse). Free income tax 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). Free income tax See Actual Knowledge or Reason To Know, later. Free income tax Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated tax. Free income tax See Indications of Unfairness for Innocent Spouse Relief , later. Free income tax 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. Free income tax A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. Free income tax 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. Free income tax Erroneous Items Erroneous items are either of the following. Free income tax Unreported income. Free income tax This is any gross income item received by your spouse (or former spouse) that is not reported. Free income tax Incorrect deduction, credit, or basis. Free income tax This is any improper deduction, credit, or property basis claimed by your spouse (or former spouse). Free income tax The following are examples of erroneous items. Free income tax The expense for which the deduction is taken was never paid or incurred. Free income tax 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. Free income tax The expense does not qualify as a deductible expense. Free income tax For example, your spouse claimed a business fee deduction of $10,000 that was for the payment of state fines. Free income tax Fines are not deductible. Free income tax No factual argument can be made to support the deductibility of the expense. Free income tax 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. Free income tax 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. Free income tax Actual knowledge. Free income tax   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. Free income tax You and your spouse (or former spouse) remain jointly liable for that part of the understated tax. Free income tax For information about the criteria for determining whether you actually knew about an erroneous item, see Actual Knowledge later under Separation of Liability Relief. Free income tax Reason to know. Free income tax   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. Free income tax You and your spouse (or former spouse) remain jointly liable for that part of the understated tax. Free income tax   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. Free income tax The facts and circumstances include: The nature of the erroneous item and the amount of the erroneous item relative to other items. Free income tax The financial situation of you and your spouse (or former spouse). Free income tax Your educational background and business experience. Free income tax The extent of your participation in the activity that resulted in the erroneous item. Free income tax 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. Free income tax 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). Free income tax Partial relief when a portion of erroneous item is unknown. Free income tax   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. Free income tax You will be relieved of the understated tax due to that portion of the item if all other requirements are met for that portion. Free income tax Example. Free income tax At the time you signed your joint return, you knew that your spouse did not report $5,000 of gambling winnings. Free income tax 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. Free income tax 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. Free income tax The understated tax due to the $20,000 will qualify for innocent spouse relief if you meet the other requirements. Free income tax The understated tax due to the $5,000 of gambling winnings you knew about will not qualify for relief. Free income tax 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. Free income tax The following are examples of factors the IRS will consider. Free income tax Whether you received a significant benefit (defined below), either directly or indirectly, from the understated tax. Free income tax Whether your spouse (or former spouse) deserted you. Free income tax Whether you and your spouse have been divorced or separated. Free income tax Whether you received a benefit on the return from the understated tax. Free income tax For other factors, see Factors for Determining Whether To Grant Equitable Relief later under Equitable Relief. Free income tax Significant benefit. Free income tax   A significant benefit is any benefit in excess of normal support. Free income tax Normal support depends on your particular circumstances. Free income tax 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. Free income tax Example. Free income tax You receive money from your spouse that is beyond normal support. Free income tax The money can be traced to your spouse's lottery winnings that were not reported on your joint return. Free income tax You will be considered to have received a significant benefit from that income. Free income tax This is true even if your spouse gives you the money several years after he or she received it. Free income tax 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). Free income tax The understated tax allocated to you is generally the amount you are responsible for. Free income tax This type of relief is available only for unpaid liabilities resulting from the understated tax. Free income tax Refunds are not allowed. Free income tax 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. Free income tax 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. Free income tax (Under this rule, you are no longer married if you are widowed. Free income tax ) 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. Free income tax Members of the same household. Free income tax   You and your spouse are not members of the same household if you are living apart and are estranged. Free income tax However, you and your spouse are considered members of the same household if any of the following conditions are met. Free income tax You and your spouse reside in the same dwelling. Free income tax 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. Free income tax 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. Free income tax Examples of temporary absences include absence due to imprisonment, illness, business, vacation, military service, or education. Free income tax Burden of proof. Free income tax   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). Free income tax You must also establish the basis for allocating the erroneous items. Free income tax Limitations on Relief Even if you meet the requirements discussed previously, separation of liability relief will not be granted in the following situations. Free income tax The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. Free income tax A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. Free income tax 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). Free income tax For the definition of erroneous items, see Erroneous Items earlier under Innocent Spouse Relief. Free income tax Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. Free income tax See Transfers of Property To Avoid Tax , later. Free income tax 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. Free income tax You and your spouse (or former spouse) remain jointly and severally liable for this part of the understated tax. Free income tax 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. Free income tax You had actual knowledge of an erroneous item if: You knew that an item of unreported income was received. Free income tax (This rule applies whether or not there was a receipt of cash. Free income tax ) You knew of the facts that made an incorrect deduction or credit unallowable. Free income tax 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. Free income tax Knowledge of the source of an erroneous item is not sufficient to establish actual knowledge. Free income tax Also, your actual knowledge may not be inferred when you merely had a reason to know of the erroneous item. Free income tax 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. Free income tax 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. Free income tax Neither is your actual knowledge of how the erroneous item was treated on the tax return. Free income tax 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. Free income tax Example. Free income tax Bill and Karen Green filed a joint return showing Karen's wages of $50,000 and Bill's self-employment income of $10,000. Free income tax The IRS audited their return and found that Bill did not report $20,000 of self-employment income. Free income tax The additional income resulted in a $6,000 understated tax, plus interest and penalties. Free income tax After obtaining a legal separation from Bill, Karen filed Form 8857 to request separation of liability relief. Free income tax The IRS proved that Karen actually knew about the $20,000 of additional income at the time she signed the joint return. Free income tax Bill is liable for all of the understated tax, interest, and penalties because all of it was due to his unreported income. Free income tax 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. Free income tax 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. Free income tax Factors supporting actual knowledge. Free income tax   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. Free income tax The following are examples of factors the IRS may use. Free income tax Whether you made a deliberate effort to avoid learning about the item in order to be shielded from liability. Free income tax Whether you and your spouse (or former spouse) jointly owned the property that resulted in the erroneous item. Free income tax Exception for spousal abuse or domestic violence. Free income tax   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. Free income tax   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. Free income tax However, you may be required to file a separate return for that tax year. Free income tax For more information about duress, see the instructions for Form 8857. Free income tax 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. Free income tax The increase may not be more than the entire amount of the liability. Free income tax 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. Free income tax 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. Free income tax 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. Free income tax 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. Free income tax 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. Free income tax An underpaid tax is an amount of tax you properly reported on your return but you have not paid. Free income tax For example, your joint 2009 return shows that you and your spouse owed $5,000. Free income tax You paid $2,000 with the return. Free income tax You have an underpaid tax of $3,000. Free income tax Conditions for Getting Equitable Relief You may qualify for equitable relief if you meet all of the following conditions. Free income tax You are not eligible for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free income tax You have an understated tax or an underpaid tax. Free income tax You did not pay the tax. Free income tax However, see Refunds , later, for situations in which you are entitled to a refund of payments you made. Free income tax 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. Free income tax See Factors for Determining Whether To Grant Equitable Relief, later. Free income tax You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free income tax A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. Free income tax Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free income tax See Transfers of Property To Avoid Tax, earlier, under Separation of Liability Relief. Free income tax You did not file or fail to file your return with the intent to commit fraud. Free income tax 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. Free income tax If you meet this exception, that item will be considered attributable to your spouse (or former spouse) for purposes of equitable relief. Free income tax If the item is titled in your name, the item is presumed to be attributable to you. Free income tax However, you can rebut this presumption based on the facts and circumstances. Free income tax 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. Free income tax 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). Free income tax 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. Free income tax 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. Free income tax 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. Free income tax The following are examples of factors that the IRS will consider to determine whether to grant equitable relief. Free income tax The IRS will consider all factors and weigh them appropriately. Free income tax Relevant Factors The following are examples of factors that may be relevant to whether the IRS will grant equitable relief. Free income tax Whether you are separated (whether legally or not) or divorced from your spouse. Free income tax A temporary absence, such as an absence due to imprisonment, illness, business, vacation, military service, or education, is not considered separation for this purpose. Free income tax 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. Free income tax Whether you would suffer a significant economic hardship if relief is not granted. Free income tax (In other words, you would not be able to pay your reasonable basic living expenses. Free income tax ) Whether you have a legal obligation under a divorce decree or agreement to pay the tax. Free income tax 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. Free income tax Whether you received a significant benefit (beyond normal support) from the underpaid tax or item causing the understated tax. Free income tax (For a definition of significant benefit, see Indications of Unfairness for Innocent Spouse Relief earlier. Free income tax ) 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. Free income tax 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. Free income tax Knowledge or reason to know. Free income tax   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. Free income tax   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. Free income tax Reason to know of the item giving rise to the understated tax will not be weighed more heavily than other factors. Free income tax Actual knowledge of the item giving rise to the understated tax, however, is a strong factor weighing against relief. Free income tax This strong factor may be overcome if the factors in favor of equitable relief are particularly compelling. Free income tax Reason to know. Free income tax   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. Free income tax Example. Free income tax You and your spouse filed a joint 2009 return. Free income tax That return showed you owed $10,000. Free income tax You had $5,000 of your own money and you took out a loan to pay the other $5,000. Free income tax You gave 2 checks for $5,000 each to your spouse to pay the $10,000 liability. Free income tax Without telling you, your spouse took the $5,000 loan and spent it on himself. Free income tax You and your spouse were divorced in 2010. Free income tax In addition, you had no knowledge or reason to know at the time you signed the return that the tax would not be paid. Free income tax These facts indicate to the IRS that it may be unfair to hold you liable for the $5,000 underpaid tax. Free income tax 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. Free income tax 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. Free income tax Whether your spouse (or former spouse) abused you. Free income tax Whether you were in poor mental or physical health on the date you signed the return or at the time you requested relief. Free income tax Refunds If you are granted relief, refunds are: Permitted under innocent spouse relief as explained later under Limit on Amount of Refund . Free income tax Not permitted under separation of liability relief. Free income tax Permitted in limited circumstances under equitable relief, as explained under Refunds Under Equitable Relief. Free income tax Proof Required The IRS will only refund payments you made with your own money. Free income tax However, you must provide proof that you made the payments with your own money. Free income tax Examples of proof are a copy of your bank statement or a canceled check. Free income tax 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. Free income tax Refunds Under Equitable Relief In the following situations, you are eligible to receive a refund of certain payments you made. Free income tax Underpaid tax. Free income tax   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. Free income tax 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. Free income tax For example, withholding tax and estimated tax payments cannot be refunded because they are considered made with the joint return. Free income tax   The amount of the refund is subject to the limit discussed later under Limit on Amount of Refund. Free income tax Understated tax. Free income tax   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. Free income tax 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. Free income tax Only installment payments made after the date you filed Form 8857 are eligible for a refund. Free income tax   The amount of the refund is subject to the limit discussed next. Free income tax Limit on Amount of Refund The amount of your refund is limited. Free income tax Read the following chart to find out the limit. Free income tax IF you file Form 8857. Free income tax . Free income tax . Free income tax THEN the refund cannot be more than. Free income tax . Free income tax . Free income tax 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. Free income tax 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. Free income tax Filled-in Form 8857 This part explains how Janie Boulder fills out Form 8857 to request innocent spouse relief. Free income tax Janie and Joe Boulder filed a joint tax return for 2007. Free income tax They claimed one dependency exemption for their son Michael. Free income tax Their return was adjusted by the IRS because Joe did not report a $5,000 award he won that year. Free income tax Janie did not know about the award when the return was filed. Free income tax They agreed to the adjustment but could not pay the additional amount due of $815 ($650 tax + $165 penalty and interest). Free income tax Janie and Joe were divorced on May 13, 2009. Free income tax In February 2010, Janie filed her 2009 federal income tax return as head of household. Free income tax She expected a refund of $1,203. Free income tax 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. Free income tax Janie applies the conditions listed earlier under Innocent Spouse Relief to see if she qualifies for relief. Free income tax Janie meets the first and second conditions because the joint tax return they filed has an understated tax due to Joe's erroneous item. Free income tax Janie believes she meets the third condition. Free income tax 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. Free income tax Janie believes she meets the fourth condition. Free income tax She believes it would be unfair to be held liable for the tax because she did not benefit from the award. Free income tax Joe spent it on personal items for his use only. Free income tax 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. Free income tax In Part I, she makes all entries under the Tax Year 1 column because she is requesting relief for only one year. Free income tax Part I Line 1. Free income tax   She enters “2007” on line 1 because this is the tax year for which she is requesting relief. Free income tax Line 2. Free income tax   She checks the box because she wants a refund. Free income tax Note. Free income tax 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. Free income tax Line 3. Free income tax   She checks the “No” box because the IRS did not use her share of a joint refund to pay Joe's past-due debts. Free income tax Line 4. Free income tax   She checks the “Yes” box because she filed a joint tax return for tax year 2007. Free income tax Line 5. Free income tax   She skips this line because she checked the “Yes” box on line 4. Free income tax Part II Line 6. Free income tax   She enters her name, address, social security number, county, and best daytime phone number. Free income tax Part III Line 7. Free income tax   She enters Joe's name, address, social security number, and best daytime phone number. Free income tax Line 8. Free income tax   She checks the “divorced since” box and enters the date she was divorced as “05/13/2009. Free income tax ” She attaches a copy of her entire divorce decree (not Illustrated) to the form. Free income tax Line 9. Free income tax   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. Free income tax Line 10. Free income tax   She checks the “No” box because she was not a victim of spousal abuse or domestic violence. Free income tax Line 11. Free income tax   She checks the “No” box because neither she nor Joe incurred any large expenses during the year for which she wants relief. Free income tax Line 12. Free income tax   She checks the “Yes” box because she signed the 2007 joint tax return. Free income tax Line 13. Free income tax   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. Free income tax Part IV Line 14. Free income tax   Because she was not involved in preparing the return, she checks the box, “You were not involved in preparing the returns. Free income tax ” Line 15. Free income tax   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. Free income tax She explains this in the space provided. Free income tax Line 16. Free income tax   She checks the box, “You knew that person had income” because she knew Joe had income from wages. Free income tax She also lists Joe's income. Free income tax Under “Type of Income” she enters “wages. Free income tax ” Under “Who paid it to that person,” she enters the name of Joe's employer, “Allied. Free income tax ” Under “Tax Year 1” she enters the amount of Joe's wages, “$40,000. Free income tax ” Because she is only requesting relief for one tax year, she leaves the entry spaces for “Tax Year 2” and “Tax Year 3” blank. Free income tax Line 17. Free income tax   She checks the “No” box because she did not know any amount was owed to the IRS when the 2007 return was signed. Free income tax Line 18. Free income tax   She checks the “No” box because, when the return was signed, she was not having financial problems. Free income tax Line 19. Free income tax   She checks the box, “You were not involved in handling money for the household” because Joe handled all the money for the household. Free income tax She provides additional information in the space provided. Free income tax Line 20. Free income tax   She checks the “No” box because Joe has never transferred money or property to her. Free income tax Part V Line 21. Free income tax   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. Free income tax Line 22. Free income tax   She enters her average monthly income for her entire household. Free income tax Line 23. Free income tax   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. Free income tax Signing and mailing Form 8857. Free income tax    Janie signs and dates the form. Free income tax She attaches the copy of her divorce decree (not illustrated) required by line 8. Free income tax Finally, she sends the form to the IRS address or fax number shown in the instructions for Form 8857. Free income tax This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Boulder's filled-in Form 8857 page 1 This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Boulder's filled-in Form 8857 page 2 This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Boulder's filled-in Form 8857 page 3 This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Boulder's filled-in Form 8857 page 4 Flowcharts The following flowcharts provide a quick way for determining whether you may qualify for relief. Free income tax But do not rely on these flowcharts alone. Free income tax Also read the earlier discussions. Free income tax Figure A. Free income tax Do You Qualify for Innocent Spouse Relief? Please click here for the text description of the image. Free income tax "Do You Qualify for Innocent Spouse Relief?" Figure B. Free income tax Do You Qualify for Separation of Liability Relief? Please click here for the text description of the image. Free income tax "Do You Qualify for Separation of Liability Relief?" Figure C. Free income tax Do You Qualify for Equitable Relief? This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax "Do You Qualify for Equitable Relief?" Prev  Up  Next   Home   More Online Publications