Community property laws can influence how income is reported when you're married and living in a community property state. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Usually, each spouse is entitled to half of the community income and expenses. If you filed a joint return, both spouses are still jointly and individually responsible for the tax. However, if you’re married and didn't file a joint return, you might qualify for relief from tax related to community income by filing Form 8857, Request for Innocent Spouse Relief.
Who Should Use This Relief?
This relief could apply if you:
- Lived in a community property state during the tax year.
- Were married during the tax year.
- Did not file a joint return.
- Are being held responsible for tax on income that belonged to your spouse or former spouse under community property laws.
- Think it would be unfair to hold you responsible for that tax liability.
Relief From Liability for Tax Attributable to Community Income
You might not have to pay tax on a community income item if all of the following are true:
- You didn’t file a joint return for the tax year.
- You didn’t include that community income in your gross income.
- The income belonged to your spouse or former spouse according to community property laws.
- You didn’t know about the income and had no reason to know about it.
- Considering everything, it wouldn’t be fair to include that income in your taxable income.
Here are some examples of community income that might qualify:
- Wages, salaries, and other pay your spouse or former spouse received.
- Income from a business your spouse or former spouse runs.
- Your spouse's or former spouse's share of partnership income.
- Income from your spouse's or former spouse's separate property.
- Other income considered to belong to your spouse or former spouse under community property law.
Equitable Relief
If you don’t qualify for relief from liability for tax related to community income, you might still be eligible for equitable relief.
The IRS could offer equitable relief if, after looking at all the facts and circumstances, they decide it wouldn’t be fair to hold you responsible for the understated or unpaid tax. Equitable relief can apply to both unpaid tax balances and understated tax liabilities.
How to Complete Form 8958
If you're filing separately in a community property state:
- Fill out Form 8958, Allocation of Tax Amounts Between Certain Individuals in Community Property States.
- Allocate income and deductions according to the community property rules that apply and the relief you're requesting.
- Take a close look at the IRS instructions, since the allocations might be different from the usual community property rules depending on your situation.
If you don’t have access to your spouse’s tax info, check your filing options and review the IRS guidance before you complete the allocation.
How and When to Request Relief
If you want to request relief, you’ll need to file Form 8857, Request for Innocent Spouse Relief. The IRS will look over your information and decide if you qualify for relief.
Try to file Form 8857 as soon as you find out about a tax liability that you think should be your spouse’s or former spouse’s responsibility. The deadlines can vary depending on the type of relief you’re asking for.
For relief from tax liability related to community income, you generally need to file Form 8857 at least six months before the IRS assessment period ends for the tax year in question. If the IRS starts an examination during that six-month window, you usually have up to 30 days after their first contact letter to request relief.
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- Request for Innocent Spouse Relief (Form 8857)
What Happens After You File Form 8857?
Once the IRS gets your request, they'll review your application and decide if they need any more information from you.
By law, the IRS has to contact your spouse or former spouse and give them a chance to be involved in the relief process. This applies in all cases, even if there’s domestic abuse involved. However, the IRS usually doesn’t share your current address, phone number, employer details, income, or asset information.
The IRS might take up to six months or longer to review your Form 8857 request and make a decision. While they’re reviewing it, make sure to keep filing and paying your current taxes as usual.
Mailing and Faxing Form 8857
You can't e-file Form 8857. Please don't attach it to your tax return or send it to the Tax Court.
If you're using the U.S. Postal Service
Internal Revenue Service
P.O. Box 120053
Covington, KY 41012
If you're using a private delivery service
Internal Revenue Service
7940 Kentucky Drive, Stop 840F
Florence, KY 41042
Fax
855-233-8558
Disclaimer: This article is for general informational purposes only and should not be considered tax, legal, or financial advice. Tax situations involving community property laws can be complex. Consult IRS Publication 971, the Form 8857 Instructions, or a qualified tax professional for guidance specific to your situation.