What You Need to Know About Filing a Joint Tax Return and Florida Divorce
In this world, nothing can be certain except for death and taxes. When individuals are first confronted with the fact that their marriage is ending and are forced to seek help from a divorce attorney, one of the last thing on their minds is tax liability. However, you should be keen to remember that there’s a reason you’ve heard Benjamin Franklin’s words tossed around ad nauseum since grade school. Sure, on your wedding day you scoffed at your father’s advice to never let your blushing bride hold you by the purse strings or ignored Great Aunt Ida’s comments about how odd it was that so many of your groom’s “fraternity brothers” were from exotic locales like Belize and Luxembourg (after all, didn’t he go to school in Poughkeepsie?!), but you were blinded by the ‘certainty’ that true love knows no harm. This may be a good time to point out some other words of wisdom proffered by Big Ben, distrust and caution are the parents of security. If only you had paid as much attention to your junior high American History teacher as you did to seeing how many games of MASH you had to play until you ended up making $10 million a year, living in a mansion in Hawaii with the captain of the football team/hot substitute teacher and a dog named Todd.
Do The Benefits of Filing a Joint Tax Return Outweigh the Consequences?
Unfortunately, the realization that your beloved has been taking a page out of Wesley Snipe’s accounting book doesn’t materialize until s*** hits the fan and your divorce attorney lets you know that you are jointly and individually responsible for any tax, interest and penalties due on a joint return for a tax year ending before the train stops at heartbreak hotel. Oh, and if you wanted a side of salt with that gaping wound from the knife in your back, this responsibility applies even if the divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns…
The Liabilities Attached to Filing A Joint Tax Return
Fear not, young Jedi. There are three ways to find relief for joint liability. The first is innocent spouse relief, whereby requesting relief, a person can be relieved of responsibility for paying tax, interest and penalties if his/her spouse (or former spouse) improperly reported items or omitted items on the tax return. Relief can generally only be collected from the spouse (or former spouse) and the person seeking relief must a) file a joint return b) have understated tax on the return that is due to erroneous items of spouse or former spouse c) show that when the return was signed they didn’t know and had no reason to know that the understated tax existed (or the extent to which it existed) and d) taking into account all the facts and circumstances, it would be unfair to hold them liable for the understated tax. The second way to secure relief for joint liability is separation of liability which applies to joint filers who are divorced, widowed, legally separated, or who have not lived together for the 12 months ending on the date election of this relief is filed. And the last is equitable relief under which, unlike innocent spouse relief or separation of liability, a person can get equitable relief from an understatement of tax or an underpayment of tax. An underpayment of tax is an amount of tax properly reported on a return but not paid. Of course, this comes with many preconditions and it is imperative to retain a qualified divorce attorney who will ensure the same are met.
A qualified divorce lawyer will go over the consequences of filing a joint tax return with you or refer you to a CPA or tax attorney. After all, as Mr. Franklin said, by failing to prepare you are preparing to fail.