Last week I gave an overview of the “Equitable Relief” option of an Innocent Spouse filing. That article is linked here.

This week’s article describes the Innocent Spouse filing available for taxpayers who live in the nine (9) community property states of California, Arizona, New Mexico, Nevada, Texas, Idaho, Washington state, Louisiana and Wisconsin. The rules for an Innocent Spouse filing for a resident of a community property state are covered by Internal Revenue Code Section 66(c).

My firm, By The Book Taxes, located in Norwalk, CT specializes in income tax preparation for individuals, families and self-employed people. By the Book Taxes also helps clients resolve their tax debts by preparing and filing Installment Payment Agreements, Offers-in-Compromise, Currently Not Collectible and Innocent or Injured Spouse applications.

Tax reporting for residents of community property states filing “married filing separate” returns is different than that for residents of other states. In a community property state, a taxpayer must report all of their own income plus one half of the income of their spouse on an MFS return.

A married, legally separated or divorced spouse or ex-spouse may request Innocent Spouse relief from the tax associated with the income from the other spouse or ex-spouse on a married filing separate tax return.

The other requirements in a 66(c) Innocent Spouse in a community property state filing are:

  • The tax liability exists due to under withholding (deficiency) or under payment
  • Filing must occur six months before tax assessment period ends (2 ½ years after return is filed)
  • Refunds are available if requesting spouse made tax payments
  • No fraudulent asset transfers between spouses prior to filing
  • The requesting spouse did not knowingly participate in filing a fraudulent joint tax return

If you have years of unfiled tax returns or owe the back taxes, please call me. I can help.