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Free 2012 Federal Tax Filing

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Free 2012 Federal Tax Filing

Free 2012 federal tax filing Publication 515 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. Free 2012 federal tax filing Tax questions. Free 2012 federal tax filing Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 515, such as legislation enacted after it was published, go to www. Free 2012 federal tax filing irs. Free 2012 federal tax filing gov/pub515. Free 2012 federal tax filing What's New Deposit interest paid to certain nonresident alien individuals. Free 2012 federal tax filing  New rules apply to reporting of deposit interest paid to certain nonresident alien individuals on or after January 1, 2013. Free 2012 federal tax filing Deposit interest of $10 or more paid to certain nonresident alien individuals must be reported on Form 1042–S. Free 2012 federal tax filing See Deposit interest paid to certain nonresident alien individuals in 2013. Free 2012 federal tax filing Portfolio interest. Free 2012 federal tax filing . Free 2012 federal tax filing  The rules determining whether interest is considered portfolio interest changed for obligations issued after March 18, 2012. Free 2012 federal tax filing Generally, interest paid on nonregistered (bearer) bonds will not be treated as portfolio interest. Free 2012 federal tax filing See Portfolio interest. Free 2012 federal tax filing U. Free 2012 federal tax filing S. Free 2012 federal tax filing real property interest. Free 2012 federal tax filing  Generally, the treatment of a regulated investment company (RIC) as a qualified investment entity (QIE) was scheduled to expire at the end of 2011. Free 2012 federal tax filing The provision has been extended through 2013. Free 2012 federal tax filing The special rules that apply to distributions from a QIE attributable to the gain from the sale or exchange of a U. Free 2012 federal tax filing S. Free 2012 federal tax filing real property interest will continue to apply to any distribution from a RIC. Free 2012 federal tax filing See Qualified investment entities under U. Free 2012 federal tax filing S. Free 2012 federal tax filing Real Property Interest. Free 2012 federal tax filing Interest-related dividends and short-term capital gain dividends received from mutual funds. Free 2012 federal tax filing  The exemption from withholding on certain interest-related dividends and short-term capital gain dividends paid by a mutual fund or other regulated investment company was scheduled to expire at the end of 2011. Free 2012 federal tax filing These provisions have been extended through 2013. Free 2012 federal tax filing Partnership withholding rate on effectively connected income. Free 2012 federal tax filing  For 2013, the rate for withholding on noncorporate partners has increased to 39. Free 2012 federal tax filing 6%. Free 2012 federal tax filing The rate for corporate partners remains 35%. Free 2012 federal tax filing Reminders Exemption from requirement to withhold for certain payments to qualified securities lenders. Free 2012 federal tax filing  If you made U. Free 2012 federal tax filing S. Free 2012 federal tax filing -source substitute dividend payments to qualified securities lenders, and these payments are part of a chain of substitute dividend payments, you may be exempt from withholding tax on the payments. Free 2012 federal tax filing See Amounts paid to qualified securities lenders . Free 2012 federal tax filing Electronic deposits. Free 2012 federal tax filing  You must make all deposits of taxes electronically. Free 2012 federal tax filing Substitute forms. Free 2012 federal tax filing  Any substitute forms you use must comply with the requirements in Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns. Free 2012 federal tax filing If they do not, the forms may be rejected as incorrect and the IRS may impose penalties. Free 2012 federal tax filing See Penalties. Free 2012 federal tax filing Filing electronically. Free 2012 federal tax filing  If you file Form 1042-S electronically, you will use the Filing Information Returns Electronically (FIRE) system. Free 2012 federal tax filing You get to the system through the Internet at fire. Free 2012 federal tax filing irs. Free 2012 federal tax filing gov. Free 2012 federal tax filing For files submitted on the FIRE system, it is the responsibility of the filer to verify the results of the transmission within 5 business days. Free 2012 federal tax filing The IRS will not mail error reports for files that are bad. Free 2012 federal tax filing Qualified intermediaries. Free 2012 federal tax filing  A branch of a financial institution may not act as a qualified intermediary in a country that does not have approved know-your-customer rules. Free 2012 federal tax filing See Qualified intermediary under Foreign Intermediaries. Free 2012 federal tax filing Requests for extensions on Form 8809 must be filed electronically. Free 2012 federal tax filing  Requests on Form 8809 for an extension of time to file Form 1042–S must be made electronically if the request is for more than one payer. Free 2012 federal tax filing See Extension to file Form 1042-S with the IRS. Free 2012 federal tax filing Photographs of missing children. Free 2012 federal tax filing  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free 2012 federal tax filing Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free 2012 federal tax filing You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free 2012 federal tax filing Introduction This publication is for withholding agents who pay income to foreign persons, including nonresident aliens, foreign corporations, foreign partnerships, foreign trusts, foreign estates, foreign governments, and international organizations. Free 2012 federal tax filing Specifically, it describes the persons responsible for withholding (withholding agents), the types of income subject to withholding, and the information return and tax return filing obligations of withholding agents. Free 2012 federal tax filing In addition to discussing the rules that apply generally to payments of U. Free 2012 federal tax filing S. Free 2012 federal tax filing source income to foreign persons, it also contains sections on the withholding that applies to the disposition of U. Free 2012 federal tax filing S. Free 2012 federal tax filing real property interests and the withholding by partnerships on income effectively connected with the active conduct of a U. Free 2012 federal tax filing S. Free 2012 federal tax filing trade or business. Free 2012 federal tax filing Beginning in 2014, additional withholding rules become effective under Chapter 4 of the Internal Revenue Code as added by the Foreign Account Tax Compliance Act (FATCA). Free 2012 federal tax filing U. Free 2012 federal tax filing S. Free 2012 federal tax filing withholding agents will be required to withhold on certain types of payments made to foreign financial institutions that do not enter into an agreement with the IRS. Free 2012 federal tax filing For information on these provisions, go to www. Free 2012 federal tax filing irs. Free 2012 federal tax filing gov/fatca. Free 2012 federal tax filing Comments and suggestions. Free 2012 federal tax filing   We welcome your comments about this publication and your suggestions for future editions. Free 2012 federal tax filing   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Free 2012 federal tax filing NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free 2012 federal tax filing Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free 2012 federal tax filing   You can email us at taxforms@irs. Free 2012 federal tax filing gov. Free 2012 federal tax filing Please put “Publications Comment” on the subject line. Free 2012 federal tax filing You can also send us comments from www. Free 2012 federal tax filing irs. Free 2012 federal tax filing gov/formspubs/. Free 2012 federal tax filing Select “Comment on Tax Forms and Publications” under “Information About. Free 2012 federal tax filing ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free 2012 federal tax filing Ordering forms and publications. Free 2012 federal tax filing   Visit www. Free 2012 federal tax filing irs. Free 2012 federal tax filing gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free 2012 federal tax filing Internal Revenue Service 1201 N. Free 2012 federal tax filing Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free 2012 federal tax filing   If you have a tax question, check the information available on IRS. Free 2012 federal tax filing gov or call 1-800-829-1040. Free 2012 federal tax filing We cannot answer tax questions sent to either of the above addresses. Free 2012 federal tax filing Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 519 U. Free 2012 federal tax filing S. Free 2012 federal tax filing Tax Guide for Aliens 901 U. Free 2012 federal tax filing S. Free 2012 federal tax filing Tax Treaties Form (and Instructions) SS-4 Application for Employer Identification Number W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate W-4P Withholding Certificate for Pension or Annuity Payments W-7 Application for IRS Individual Taxpayer Identification Number W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding W-8ECI Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States W-8EXP Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding W-8IMY Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. Free 2012 federal tax filing S. Free 2012 federal tax filing Branches for United States Tax Withholding 941 Employer's QUARTERLY Federal Tax Return 1042 Annual Withholding Tax Return for U. Free 2012 federal tax filing S. Free 2012 federal tax filing Source Income of Foreign Persons 1042-S Foreign Person's U. Free 2012 federal tax filing S. Free 2012 federal tax filing Source Income Subject to Withholding 1042-T Annual Summary and Transmittal of Forms 1042-S See How To Get Tax Help at the end of this publication, for information about getting publications and forms. Free 2012 federal tax filing Prev  Up  Next   Home   More Online Publications
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The Free 2012 Federal Tax Filing

Free 2012 federal tax filing Publication 971 - Main Content Table of Contents How To Request ReliefException for agreements relating to TEFRA partnership proceedings. Free 2012 federal tax filing 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 2012 federal tax filing If you are requesting relief for more than three tax years, you must file an additional Form 8857. Free 2012 federal tax filing The IRS will review your Form 8857 and let you know if you qualify. Free 2012 federal tax filing A completed Form 8857 is shown later. Free 2012 federal tax filing When to file Form 8857. Free 2012 federal tax filing   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 2012 federal tax filing The following are some of the ways you may become aware of such a liability. Free 2012 federal tax filing The IRS is examining your tax return and proposing to increase your tax liability. Free 2012 federal tax filing The IRS sends you a notice. Free 2012 federal tax filing   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 2012 federal tax filing (But see the exceptions below for different filing deadlines that apply. Free 2012 federal tax filing ) For this reason, do not delay filing because you do not have all the documentation. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing This includes the filing of a proof of claim in a bankruptcy proceeding. Free 2012 federal tax filing The filing of a suit by the United States against you to collect the joint liability. Free 2012 federal tax filing 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 2012 federal tax filing The collection-related notices include, but are not limited to, Letter 11 and Letter 1058. Free 2012 federal tax filing Exception for equitable relief. Free 2012 federal tax filing   On July 25, 2011, the IRS issued Notice 2011-70 (available at www. Free 2012 federal tax filing irs. Free 2012 federal tax filing gov/irb/2011-32_IRB/ar11. Free 2012 federal tax filing html) expanding the amount of time to request equitable relief. Free 2012 federal tax filing 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 2012 federal tax filing Generally, the IRS has 10 years from the date the tax liability was assessed to collect the tax. Free 2012 federal tax filing In certain cases, the 10-year period is suspended. Free 2012 federal tax filing The amount of time the suspension is in effect will extend the time the IRS has to collect the tax. Free 2012 federal tax filing See Pub. Free 2012 federal tax filing 594, The IRS Collection Process, for details. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing See Pub. Free 2012 federal tax filing 556, Examination of Returns, Appeal Rights, and Claims for Refund, for details. Free 2012 federal tax filing 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 2012 federal tax filing Exception for relief based on community property laws. Free 2012 federal tax filing   If you are requesting relief based on community property laws, a different filing deadline applies. Free 2012 federal tax filing See Relief from liability arising from community property law discussed later under Community Property Laws . Free 2012 federal tax filing Form 8857 filed by or on behalf of a decedent. Free 2012 federal tax filing   An executor (including any other duly appointed representative) may pursue a Form 8857 filed during the decedent's lifetime. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Situations in which you are not entitled to relief. Free 2012 federal tax filing   You are not entitled to innocent spouse relief for any tax year to which the following situations apply. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing You entered into an offer in compromise with the IRS. Free 2012 federal tax filing You entered into a closing agreement with the IRS that disposed of the same liability for which you want to seek relief. Free 2012 federal tax filing Exception for agreements relating to TEFRA partnership proceedings. Free 2012 federal tax filing   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 2012 federal tax filing (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 2012 federal tax filing ) 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 2012 federal tax filing Transferee liability not affected by innocent spouse relief provisions. Free 2012 federal tax filing   The innocent spouse relief provisions do not affect tax liabilities that arise under federal or state transferee liability or property laws. Free 2012 federal tax filing 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 2012 federal tax filing Example. Free 2012 federal tax filing Herb and Wanda timely filed their 2008 joint income tax return on April 15, 2009. Free 2012 federal tax filing Herb died in March 2010, and the executor of Herb's will transferred all of the estate's assets to Wanda. Free 2012 federal tax filing In August 2010, the IRS assessed a deficiency for the 2008 return. Free 2012 federal tax filing The items causing the deficiency belong to Herb. Free 2012 federal tax filing Wanda is relieved of the deficiency under the innocent spouse relief provisions, and Herb's estate remains solely liable for it. Free 2012 federal tax filing However, the IRS may collect the deficiency from Wanda to the extent permitted under federal or state transferee liability or property laws. Free 2012 federal tax filing The IRS Must Contact Your Spouse or Former Spouse By law, the IRS must contact your spouse or former spouse. Free 2012 federal tax filing There are no exceptions, even for victims of spousal abuse or domestic violence. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing If you petition the Tax Court (explained below), your spouse or former spouse may see your personal information. Free 2012 federal tax filing 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 2012 federal tax filing The IRS sends you a final determination letter regarding your request for relief. Free 2012 federal tax filing You do not receive a final determination letter from the IRS within six months from the date you filed Form 8857. Free 2012 federal tax filing 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 2012 federal tax filing The United States Tax Court is an independent judicial body and is not part of the IRS. Free 2012 federal tax filing You must file a petition with the United States Tax Court in order for it to review your request for relief. Free 2012 federal tax filing You must file the petition no later than the 90th day after the date the IRS mails its final determination notice to you. Free 2012 federal tax filing If you do not file a petition, or you file it late, the Tax Court cannot review your request for relief. Free 2012 federal tax filing 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 2012 federal tax filing ustaxcourt. Free 2012 federal tax filing 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 2012 federal tax filing Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2012 federal tax filing Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing You did not file a joint return for the tax year. Free 2012 federal tax filing You did not include the item of community income in gross income. Free 2012 federal tax filing 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 2012 federal tax filing Income your spouse (or former spouse) derived from a trade or business he or she operated as a sole proprietor. Free 2012 federal tax filing Your spouse's (or former spouse's) distributive share of partnership income. Free 2012 federal tax filing Income from your spouse's (or former spouse's) separate property (other than income described in (a), (b), or (c)). Free 2012 federal tax filing Use the appropriate community property law to determine what is separate property. Free 2012 federal tax filing Any other income that belongs to your spouse (or former spouse) under community property law. Free 2012 federal tax filing You establish that you did not know of, and had no reason to know of, that community income. Free 2012 federal tax filing See  Actual Knowledge or Reason To Know , below. Free 2012 federal tax filing Under all facts and circumstances, it would not be fair to include the item of community income in your gross income. Free 2012 federal tax filing See Indications of unfairness for liability arising from community property law, later. Free 2012 federal tax filing Actual knowledge or reason to know. Free 2012 federal tax filing   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 2012 federal tax filing Amount of community income unknown. Free 2012 federal tax filing   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 2012 federal tax filing Not knowing the specific amount is not a basis for relief. Free 2012 federal tax filing Reason to know. Free 2012 federal tax filing   The IRS will consider all facts and circumstances in determining whether you had reason to know of an item of community income. Free 2012 federal tax filing 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 2012 federal tax filing The financial situation of you and your spouse (or former spouse). Free 2012 federal tax filing Your educational background and business experience. Free 2012 federal tax filing 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 2012 federal tax filing Indications of unfairness for liability arising from community property law. Free 2012 federal tax filing   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 2012 federal tax filing   The following are examples of factors the IRS will consider. Free 2012 federal tax filing Whether you received a benefit, either directly or indirectly, from the omitted item of community income (defined below). Free 2012 federal tax filing Whether your spouse (or former spouse) deserted you. Free 2012 federal tax filing Whether you and your spouse have been divorced or separated. Free 2012 federal tax filing  For other factors see Factors for Determining Whether To Grant Equitable Relief later. Free 2012 federal tax filing Benefit from omitted item of community income. Free 2012 federal tax filing   A benefit includes normal support, but does not include de minimis (small) amounts. Free 2012 federal tax filing 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 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing How and When To Request Relief You request relief by filing Form 8857, as discussed earlier. Free 2012 federal tax filing Fill in Form 8857 according to the instructions. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Generally, the tax, interest, and penalties that qualify for relief can only be collected from your spouse (or former spouse). Free 2012 federal tax filing However, you are jointly and individually responsible for any tax, interest, and penalties that do not qualify for relief. Free 2012 federal tax filing The IRS can collect these amounts from either you or your spouse (or former spouse). Free 2012 federal tax filing You must meet all of the following conditions to qualify for innocent spouse relief. Free 2012 federal tax filing You filed a joint return. Free 2012 federal tax filing There is an understated tax on the return that is due to erroneous items (defined later) of your spouse (or former spouse). Free 2012 federal tax filing 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 2012 federal tax filing See Actual Knowledge or Reason To Know, later. Free 2012 federal tax filing Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated tax. Free 2012 federal tax filing See Indications of Unfairness for Innocent Spouse Relief , later. Free 2012 federal tax filing 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 2012 federal tax filing A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. Free 2012 federal tax filing 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 2012 federal tax filing Erroneous Items Erroneous items are either of the following. Free 2012 federal tax filing Unreported income. Free 2012 federal tax filing This is any gross income item received by your spouse (or former spouse) that is not reported. Free 2012 federal tax filing Incorrect deduction, credit, or basis. Free 2012 federal tax filing This is any improper deduction, credit, or property basis claimed by your spouse (or former spouse). Free 2012 federal tax filing The following are examples of erroneous items. Free 2012 federal tax filing The expense for which the deduction is taken was never paid or incurred. Free 2012 federal tax filing 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 2012 federal tax filing The expense does not qualify as a deductible expense. Free 2012 federal tax filing For example, your spouse claimed a business fee deduction of $10,000 that was for the payment of state fines. Free 2012 federal tax filing Fines are not deductible. Free 2012 federal tax filing No factual argument can be made to support the deductibility of the expense. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Actual knowledge. Free 2012 federal tax filing   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 2012 federal tax filing You and your spouse (or former spouse) remain jointly liable for that part of the understated tax. Free 2012 federal tax filing 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 2012 federal tax filing Reason to know. Free 2012 federal tax filing   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 2012 federal tax filing You and your spouse (or former spouse) remain jointly liable for that part of the understated tax. Free 2012 federal tax filing   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 2012 federal tax filing The facts and circumstances include: The nature of the erroneous item and the amount of the erroneous item relative to other items. Free 2012 federal tax filing The financial situation of you and your spouse (or former spouse). Free 2012 federal tax filing Your educational background and business experience. Free 2012 federal tax filing The extent of your participation in the activity that resulted in the erroneous item. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Partial relief when a portion of erroneous item is unknown. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing Example. Free 2012 federal tax filing At the time you signed your joint return, you knew that your spouse did not report $5,000 of gambling winnings. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing The understated tax due to the $20,000 will qualify for innocent spouse relief if you meet the other requirements. Free 2012 federal tax filing The understated tax due to the $5,000 of gambling winnings you knew about will not qualify for relief. Free 2012 federal tax filing 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 2012 federal tax filing The following are examples of factors the IRS will consider. Free 2012 federal tax filing Whether you received a significant benefit (defined below), either directly or indirectly, from the understated tax. Free 2012 federal tax filing Whether your spouse (or former spouse) deserted you. Free 2012 federal tax filing Whether you and your spouse have been divorced or separated. Free 2012 federal tax filing Whether you received a benefit on the return from the understated tax. Free 2012 federal tax filing For other factors, see Factors for Determining Whether To Grant Equitable Relief later under Equitable Relief. Free 2012 federal tax filing Significant benefit. Free 2012 federal tax filing   A significant benefit is any benefit in excess of normal support. Free 2012 federal tax filing Normal support depends on your particular circumstances. Free 2012 federal tax filing 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 2012 federal tax filing Example. Free 2012 federal tax filing You receive money from your spouse that is beyond normal support. Free 2012 federal tax filing The money can be traced to your spouse's lottery winnings that were not reported on your joint return. Free 2012 federal tax filing You will be considered to have received a significant benefit from that income. Free 2012 federal tax filing This is true even if your spouse gives you the money several years after he or she received it. Free 2012 federal tax filing 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 2012 federal tax filing The understated tax allocated to you is generally the amount you are responsible for. Free 2012 federal tax filing This type of relief is available only for unpaid liabilities resulting from the understated tax. Free 2012 federal tax filing Refunds are not allowed. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing (Under this rule, you are no longer married if you are widowed. Free 2012 federal tax filing ) 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 2012 federal tax filing Members of the same household. Free 2012 federal tax filing   You and your spouse are not members of the same household if you are living apart and are estranged. Free 2012 federal tax filing However, you and your spouse are considered members of the same household if any of the following conditions are met. Free 2012 federal tax filing You and your spouse reside in the same dwelling. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Examples of temporary absences include absence due to imprisonment, illness, business, vacation, military service, or education. Free 2012 federal tax filing Burden of proof. Free 2012 federal tax filing   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 2012 federal tax filing You must also establish the basis for allocating the erroneous items. Free 2012 federal tax filing Limitations on Relief Even if you meet the requirements discussed previously, separation of liability relief will not be granted in the following situations. Free 2012 federal tax filing The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. Free 2012 federal tax filing A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. Free 2012 federal tax filing 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 2012 federal tax filing For the definition of erroneous items, see Erroneous Items earlier under Innocent Spouse Relief. Free 2012 federal tax filing Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. Free 2012 federal tax filing See Transfers of Property To Avoid Tax , later. Free 2012 federal tax filing 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 2012 federal tax filing You and your spouse (or former spouse) remain jointly and severally liable for this part of the understated tax. Free 2012 federal tax filing 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 2012 federal tax filing You had actual knowledge of an erroneous item if: You knew that an item of unreported income was received. Free 2012 federal tax filing (This rule applies whether or not there was a receipt of cash. Free 2012 federal tax filing ) You knew of the facts that made an incorrect deduction or credit unallowable. Free 2012 federal tax filing 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 2012 federal tax filing Knowledge of the source of an erroneous item is not sufficient to establish actual knowledge. Free 2012 federal tax filing Also, your actual knowledge may not be inferred when you merely had a reason to know of the erroneous item. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Neither is your actual knowledge of how the erroneous item was treated on the tax return. Free 2012 federal tax filing 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 2012 federal tax filing Example. Free 2012 federal tax filing 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 2012 federal tax filing The IRS audited their return and found that Bill did not report $20,000 of self-employment income. Free 2012 federal tax filing The additional income resulted in a $6,000 understated tax, plus interest and penalties. Free 2012 federal tax filing After obtaining a legal separation from Bill, Karen filed Form 8857 to request separation of liability relief. Free 2012 federal tax filing The IRS proved that Karen actually knew about the $20,000 of additional income at the time she signed the joint return. Free 2012 federal tax filing Bill is liable for all of the understated tax, interest, and penalties because all of it was due to his unreported income. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Factors supporting actual knowledge. Free 2012 federal tax filing   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 2012 federal tax filing The following are examples of factors the IRS may use. Free 2012 federal tax filing Whether you made a deliberate effort to avoid learning about the item in order to be shielded from liability. Free 2012 federal tax filing Whether you and your spouse (or former spouse) jointly owned the property that resulted in the erroneous item. Free 2012 federal tax filing Exception for spousal abuse or domestic violence. Free 2012 federal tax filing   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 2012 federal tax filing   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 2012 federal tax filing However, you may be required to file a separate return for that tax year. Free 2012 federal tax filing For more information about duress, see the instructions for Form 8857. Free 2012 federal tax filing 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 2012 federal tax filing The increase may not be more than the entire amount of the liability. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing An underpaid tax is an amount of tax you properly reported on your return but you have not paid. Free 2012 federal tax filing For example, your joint 2009 return shows that you and your spouse owed $5,000. Free 2012 federal tax filing You paid $2,000 with the return. Free 2012 federal tax filing You have an underpaid tax of $3,000. Free 2012 federal tax filing Conditions for Getting Equitable Relief You may qualify for equitable relief if you meet all of the following conditions. Free 2012 federal tax filing You are not eligible for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free 2012 federal tax filing You have an understated tax or an underpaid tax. Free 2012 federal tax filing You did not pay the tax. Free 2012 federal tax filing However, see Refunds , later, for situations in which you are entitled to a refund of payments you made. Free 2012 federal tax filing 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 2012 federal tax filing See Factors for Determining Whether To Grant Equitable Relief, later. Free 2012 federal tax filing You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free 2012 federal tax filing A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. Free 2012 federal tax filing Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free 2012 federal tax filing See Transfers of Property To Avoid Tax, earlier, under Separation of Liability Relief. Free 2012 federal tax filing You did not file or fail to file your return with the intent to commit fraud. Free 2012 federal tax filing 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 2012 federal tax filing If you meet this exception, that item will be considered attributable to your spouse (or former spouse) for purposes of equitable relief. Free 2012 federal tax filing If the item is titled in your name, the item is presumed to be attributable to you. Free 2012 federal tax filing However, you can rebut this presumption based on the facts and circumstances. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing The following are examples of factors that the IRS will consider to determine whether to grant equitable relief. Free 2012 federal tax filing The IRS will consider all factors and weigh them appropriately. Free 2012 federal tax filing Relevant Factors The following are examples of factors that may be relevant to whether the IRS will grant equitable relief. Free 2012 federal tax filing Whether you are separated (whether legally or not) or divorced from your spouse. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Whether you would suffer a significant economic hardship if relief is not granted. Free 2012 federal tax filing (In other words, you would not be able to pay your reasonable basic living expenses. Free 2012 federal tax filing ) Whether you have a legal obligation under a divorce decree or agreement to pay the tax. Free 2012 federal tax filing 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 2012 federal tax filing Whether you received a significant benefit (beyond normal support) from the underpaid tax or item causing the understated tax. Free 2012 federal tax filing (For a definition of significant benefit, see Indications of Unfairness for Innocent Spouse Relief earlier. Free 2012 federal tax filing ) 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 2012 federal tax filing 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 2012 federal tax filing Knowledge or reason to know. Free 2012 federal tax filing   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 2012 federal tax filing   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 2012 federal tax filing Reason to know of the item giving rise to the understated tax will not be weighed more heavily than other factors. Free 2012 federal tax filing Actual knowledge of the item giving rise to the understated tax, however, is a strong factor weighing against relief. Free 2012 federal tax filing This strong factor may be overcome if the factors in favor of equitable relief are particularly compelling. Free 2012 federal tax filing Reason to know. Free 2012 federal tax filing   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 2012 federal tax filing Example. Free 2012 federal tax filing You and your spouse filed a joint 2009 return. Free 2012 federal tax filing That return showed you owed $10,000. Free 2012 federal tax filing You had $5,000 of your own money and you took out a loan to pay the other $5,000. Free 2012 federal tax filing You gave 2 checks for $5,000 each to your spouse to pay the $10,000 liability. Free 2012 federal tax filing Without telling you, your spouse took the $5,000 loan and spent it on himself. Free 2012 federal tax filing You and your spouse were divorced in 2010. Free 2012 federal tax filing 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 2012 federal tax filing These facts indicate to the IRS that it may be unfair to hold you liable for the $5,000 underpaid tax. Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Whether your spouse (or former spouse) abused you. Free 2012 federal tax filing Whether you were in poor mental or physical health on the date you signed the return or at the time you requested relief. Free 2012 federal tax filing Refunds If you are granted relief, refunds are: Permitted under innocent spouse relief as explained later under Limit on Amount of Refund . Free 2012 federal tax filing Not permitted under separation of liability relief. Free 2012 federal tax filing Permitted in limited circumstances under equitable relief, as explained under Refunds Under Equitable Relief. Free 2012 federal tax filing Proof Required The IRS will only refund payments you made with your own money. Free 2012 federal tax filing However, you must provide proof that you made the payments with your own money. Free 2012 federal tax filing Examples of proof are a copy of your bank statement or a canceled check. Free 2012 federal tax filing 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 2012 federal tax filing Refunds Under Equitable Relief In the following situations, you are eligible to receive a refund of certain payments you made. Free 2012 federal tax filing Underpaid tax. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing For example, withholding tax and estimated tax payments cannot be refunded because they are considered made with the joint return. Free 2012 federal tax filing   The amount of the refund is subject to the limit discussed later under Limit on Amount of Refund. Free 2012 federal tax filing Understated tax. Free 2012 federal tax filing   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 2012 federal tax filing 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 2012 federal tax filing Only installment payments made after the date you filed Form 8857 are eligible for a refund. Free 2012 federal tax filing   The amount of the refund is subject to the limit discussed next. Free 2012 federal tax filing Limit on Amount of Refund The amount of your refund is limited. Free 2012 federal tax filing Read the following chart to find out the limit. Free 2012 federal tax filing IF you file Form 8857. Free 2012 federal tax filing . Free 2012 federal tax filing . Free 2012 federal tax filing THEN the refund cannot be more than. Free 2012 federal tax filing . Free 2012 federal tax filing . Free 2012 federal tax filing 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 2012 federal tax filing 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 2012 federal tax filing Filled-in Form 8857 This part explains how Janie Boulder fills out Form 8857 to request innocent spouse relief. Free 2012 federal tax filing Janie and Joe Boulder filed a joint tax return for 2007. Free 2012 federal tax filing They claimed one dependency exemption for their son Michael. Free 2012 federal tax filing Their return was adjusted by the IRS because Joe did not report a $5,000 award he won that year. Free 2012 federal tax filing Janie did not know about the award when the return was filed. Free 2012 federal tax filing They agreed to the adjustment but could not pay the additional amount due of $815 ($650 tax + $165 penalty and interest). Free 2012 federal tax filing Janie and Joe were divorced on May 13, 2009. Free 2012 federal tax filing In February 2010, Janie filed her 2009 federal income tax return as head of household. Free 2012 federal tax filing She expected a refund of $1,203. Free 2012 federal tax filing 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 2012 federal tax filing Janie applies the conditions listed earlier under Innocent Spouse Relief to see if she qualifies for relief. Free 2012 federal tax filing 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 2012 federal tax filing Janie believes she meets the third condition. Free 2012 federal tax filing 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 2012 federal tax filing Janie believes she meets the fourth condition. Free 2012 federal tax filing She believes it would be unfair to be held liable for the tax because she did not benefit from the award. Free 2012 federal tax filing Joe spent it on personal items for his use only. Free 2012 federal tax filing 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 2012 federal tax filing In Part I, she makes all entries under the Tax Year 1 column because she is requesting relief for only one year. Free 2012 federal tax filing Part I Line 1. Free 2012 federal tax filing   She enters “2007” on line 1 because this is the tax year for which she is requesting relief. Free 2012 federal tax filing Line 2. Free 2012 federal tax filing   She checks the box because she wants a refund. Free 2012 federal tax filing Note. Free 2012 federal tax filing 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 2012 federal tax filing Line 3. Free 2012 federal tax filing   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 2012 federal tax filing Line 4. Free 2012 federal tax filing   She checks the “Yes” box because she filed a joint tax return for tax year 2007. Free 2012 federal tax filing Line 5. Free 2012 federal tax filing   She skips this line because she checked the “Yes” box on line 4. Free 2012 federal tax filing Part II Line 6. Free 2012 federal tax filing   She enters her name, address, social security number, county, and best daytime phone number. Free 2012 federal tax filing Part III Line 7. Free 2012 federal tax filing   She enters Joe's name, address, social security number, and best daytime phone number. Free 2012 federal tax filing Line 8. Free 2012 federal tax filing   She checks the “divorced since” box and enters the date she was divorced as “05/13/2009. Free 2012 federal tax filing ” She attaches a copy of her entire divorce decree (not Illustrated) to the form. Free 2012 federal tax filing Line 9. Free 2012 federal tax filing   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 2012 federal tax filing Line 10. Free 2012 federal tax filing   She checks the “No” box because she was not a victim of spousal abuse or domestic violence. Free 2012 federal tax filing Line 11. Free 2012 federal tax filing   She checks the “No” box because neither she nor Joe incurred any large expenses during the year for which she wants relief. Free 2012 federal tax filing Line 12. Free 2012 federal tax filing   She checks the “Yes” box because she signed the 2007 joint tax return. Free 2012 federal tax filing Line 13. Free 2012 federal tax filing   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 2012 federal tax filing Part IV Line 14. Free 2012 federal tax filing   Because she was not involved in preparing the return, she checks the box, “You were not involved in preparing the returns. Free 2012 federal tax filing ” Line 15. Free 2012 federal tax filing   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 2012 federal tax filing She explains this in the space provided. Free 2012 federal tax filing Line 16. Free 2012 federal tax filing   She checks the box, “You knew that person had income” because she knew Joe had income from wages. Free 2012 federal tax filing She also lists Joe's income. Free 2012 federal tax filing Under “Type of Income” she enters “wages. Free 2012 federal tax filing ” Under “Who paid it to that person,” she enters the name of Joe's employer, “Allied. Free 2012 federal tax filing ” Under “Tax Year 1” she enters the amount of Joe's wages, “$40,000. Free 2012 federal tax filing ” 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 2012 federal tax filing Line 17. Free 2012 federal tax filing   She checks the “No” box because she did not know any amount was owed to the IRS when the 2007 return was signed. Free 2012 federal tax filing Line 18. Free 2012 federal tax filing   She checks the “No” box because, when the return was signed, she was not having financial problems. Free 2012 federal tax filing Line 19. Free 2012 federal tax filing   She checks the box, “You were not involved in handling money for the household” because Joe handled all the money for the household. Free 2012 federal tax filing She provides additional information in the space provided. Free 2012 federal tax filing Line 20. Free 2012 federal tax filing   She checks the “No” box because Joe has never transferred money or property to her. Free 2012 federal tax filing Part V Line 21. Free 2012 federal tax filing   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 2012 federal tax filing Line 22. Free 2012 federal tax filing   She enters her average monthly income for her entire household. Free 2012 federal tax filing Line 23. Free 2012 federal tax filing   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 2012 federal tax filing Signing and mailing Form 8857. Free 2012 federal tax filing    Janie signs and dates the form. Free 2012 federal tax filing She attaches the copy of her divorce decree (not illustrated) required by line 8. Free 2012 federal tax filing Finally, she sends the form to the IRS address or fax number shown in the instructions for Form 8857. Free 2012 federal tax filing This image is too large to be displayed in the current screen. Free 2012 federal tax filing Please click the link to view the image. Free 2012 federal tax filing Boulder's filled-in Form 8857 page 1 This image is too large to be displayed in the current screen. Free 2012 federal tax filing Please click the link to view the image. Free 2012 federal tax filing Boulder's filled-in Form 8857 page 2 This image is too large to be displayed in the current screen. Free 2012 federal tax filing Please click the link to view the image. Free 2012 federal tax filing Boulder's filled-in Form 8857 page 3 This image is too large to be displayed in the current screen. Free 2012 federal tax filing Please click the link to view the image. Free 2012 federal tax filing 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 2012 federal tax filing But do not rely on these flowcharts alone. Free 2012 federal tax filing Also read the earlier discussions. Free 2012 federal tax filing Figure A. Free 2012 federal tax filing Do You Qualify for Innocent Spouse Relief? Please click here for the text description of the image. Free 2012 federal tax filing "Do You Qualify for Innocent Spouse Relief?" Figure B. Free 2012 federal tax filing Do You Qualify for Separation of Liability Relief? Please click here for the text description of the image. Free 2012 federal tax filing "Do You Qualify for Separation of Liability Relief?" Figure C. Free 2012 federal tax filing Do You Qualify for Equitable Relief? This image is too large to be displayed in the current screen. Free 2012 federal tax filing Please click the link to view the image. Free 2012 federal tax filing "Do You Qualify for Equitable Relief?" Prev  Up  Next   Home   More Online Publications