Joint Tax Returns for Divorcing Couples
Americans pay over a trillion dollars each year in taxes. As a result, couples are always looking for advantages and ways to pay the least amount of taxes possible. Filing status is determined as of the last day of the calendar year. As such, individuals are considered unmarried for the whole year if on the last day of the tax season, they are unmarried or legally separated from their spouse due to a divorce. Instead, an individual will either file as single or head of household. The advantage of filing a joint tax return is that a couple can save money as compared to filing separately. Joint tax returns, however, are not as advantageous as some individuals believe. This article will discuss the various dangers presented for a divorcing couple who files a joint tax return.
- Both Are Liable. Even if only one spouse earned most of the income, if the spouses file joint tax returns then both spouses are jointly and severally liable for the entire income tax bill. This issue most commonly occurs when unpaid taxes exist from joint filing years and a couple divorces. The Internal Revenue Service can then pursue either spouse for the full amount of the money. As a result, you can end up paying the entire bill if liable.
- Innocent Spouse Rule. If a spouse can prove that the spouse had no reason to suspect tax shortfalls and did not personally benefit from unreported income or that the joint tax return was only signed under duress, then the spouse may get off off the hook. These types of claims, however, are difficult to establish.
- Ask Questions or Don’t Sign. If your family spends significantly more money than is listed on the income tax return, then ask questions about the return or simply do not sign the return. You should specifically be curious about signing a joint return if your soon-to-be ex spouse has already been deceitful about other things in the marriage.
- If the Court Orders You To File Jointly. In the event that the court does order a couple to file a joint return in the final years of marriage, a spouse may demonstrate various evidence against filing a joint return including arguing that nonmarital assets of each spouse may be subject to liability for the tax attributed to the income of the other spouse, the difficulty of obtaining relief under the innocent spouse rule, if the spouse has already been deceived in the relationship and is distrustful about signing the joint tax return, and that signing a joint return may present considerable liability with little to no benefit. Keep in mind that even if the court orders you to file a joint return, there are still many ways to argue against doing so.
If you are headed towards separation, the best response is likely to file separately. While you might pay a little more in taxes, you do not leave yourself open to liability as you would if you filed a joint tax return. If you are faced with the situation of questioning whether to file taxes independently or jointly, contact a seasoned and experienced attorney at Conner & Lindamood, P.C. in Houston where our lawyers have a track record of helping divorced individuals.