March 26, 2020

Taxes And Divorce

With the tax deadline quickly approaching there are many things that need to be considered when going through a divorce. Taxes are complicated and can add issues to a divorce where there may not even be many issues. Many issues can arise out of filing taxes during or after your divorce.


One example of this is that both parties can be held liable by the IRS. If your spouse is doing something wrong or illegal you can file for innocent spouse relief. While you can be held accountable for your spouse’s actions you can try and prove you are not involved if a spouse who you are splitting from and are no longer discussing finances with.


You also need to be mindful of scams. There are a lot of fake IRS calls and letters out there that are not really working in the IRS. Getting one of these scams at the wrong time like when going through a divorce verify it is a legitimate issue and you are dealing with the right people. The IRS almost never calls people. They can also seize your bank account without really contacting you. They can send you a letter and then years later can seize the account.


The IRS can seize many of your assets. They can not only seize bank accounts, but they can also seize retirement accounts. They are one of the only two agencies that can do so. They can also seize your property. While it is rare for them to seize primary residence, they can take other vacation homes and rental properties you own. They can garnish your wages and take from your paychecks as well.


In general, if you owe the IRS money, they aren’t going to put you in jail. While it is possible to be brought up on charges if you hide assets and intentionally lie on your return then they can bring charges against you. You most likely will not go to jail if you simply owe money to the IRS. Typically, the IRS will bring charges against you if they suspect you are doing so with criminal intent.


In instances of one spouse not reporting cash they are receiving as income the best scenario for the person not reporting would be to make sure there is no criminal exposure. You get criminal immunity if you file to correct the issue and you want to do it before a whistle blower reports you. The spouse who filed jointly with the person can use the innocent spouse relief, but they cannot use this until the IRS acts against the spouse who was not reporting. Incentives for these whistle blowers can get 15% to 20% of what the IRS gets from the person.


Ultimately the IRS is willing to reach a compromise with you instead of going through litigation and chase you down for payment. They would rather have you pay a bit less than chase you over what you owe. The sooner you pay your taxes and handle any issues the better off you will be. Don’t wait until it’s too late. If you have any questions about your situation contact an accountant and if you have an issue while going through your divorce contact The Law Offices of Michael Kuldiner. The quicker you handle this problem the better.