Divorce and the IRS

TaxesThere are two things certain in this life, death and taxes. But, when it comes to divorce and taxes there’s one thing many people don’t understand – the couple that files together (i.e. jointly) owes together.

Before filing a joint tax return stop and consider this – a joint tax return is essentially a contract between you and the government acknowledging that you are both 100 percent responsible for taxes due. This does not mean that if one spouse decides not to pay the taxes, then you are responsible for half (50 percent) of those taxes. It means that you are both 100 percent responsible. If he or she doesn’t pay, then the onus is on the other spouse or ex-spouse to pay.

From the IRS: “In filing jointly, both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise as a result of the joint return, even if they later divorce. “

This is also true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. The IRS doesn’t care what legal agreements you made – it simply wants its money. It will be up to a judge to decide what to do if a spouse violates the agreement.

Read more: Divorce and the IRS

Appellate court rules comingled assets become marital asset subject to equitable distribution

cutting money with scissorsBefore most people marry they come into the relationship with money or some other asset(s) – i.e. a car, a home, furniture, etc. And while most people don’t like to contemplate separation, it does happen. That’s why it’s important to think about what assets you want to keep separate after saying “I do.”

A recent ruling out of Florida’s Fourth District Court of Appeal should serve as a lesson to married couples who choose to comingle their assets: Once you do, there’s likely no going back if you decide to split.

Comingling assets happens when a spouses’ assets that he or she comes into a marriage with is combined with the assets of the other spouse or with the assets that the couple obtains during their marriage.

In Sorgen v. Sorgen, the 4th DCA held that the wife’s interest in a rental home that she inherited before getting married became a marital asset after the couple used joint funds to renovate the home and later deposited rental money into a joint account and used that joint account to pay taxes.

First some background: Before Denise Sorgen married she and two of her sisters each inherited one-third interest in the home. They rented it and deposited the rent into a separate account. After Denise Sorgen married, her sisters each sold their interest in the home to her. After fixing it up and renting the home for a period of time, Denise and her husband Michael sold the home and used some of the proceeds to pay capital gains taxes. The rest of the money was deposited into a joint account, which was used to execute stock trades, according to the ruling.

Read more: Appellate court rules comingled assets become marital asset subject to equitable distribution

Parents equally sharing custody may be best for the child

shared parenting smallWhile courts have historically favored mothers when it comes to custody, there is a movement taking place that calls for equally shared parenting. Earlier this month, Sioux Falls, South Dakota became the newest state to pass a shared parenting law. Now, courts there will have the option of granting more equal custody to parents who meet certain guidelines.

I recently wrote an article that appeared in the Daily Business Review about the need for equally shared parenting.

Click here to read the Daily Business Review article.

4th DCA: Settlement agreement places limits alimony modification

Money fightWhen Robert Elbaum divorced his wife of 17 years in 2007, the final judgment dissolving their marriage included a settlement agreement requiring him to pay her $2,000 a month in permanent alimony until he reached the age of 62.

Besides the age limitation, the agreement provided that alimony could be terminated should his ex-wife remarry or one of them die.

The agreement also provided that alimony could not be modified except in the event of an unforeseen circumstance involving the ex-husband’s business or health affecting his ability to work and only in the event he receives no business income as a result.

Despite the limitations, in 2012 the ex-husband filed a petition seeking to modify or terminate his alimony obligation on the grounds that his former wife no longer needed to collect because she was in a “supportive relationship” where she had been living with and mingling her assets with her new partner for at least two years.

The former wife moved to dismiss the motion and the trial court granted her request finding that the settlement agreement was clear that alimony could not be modified except in the previously agreed to exceptions.

Read more: 4th DCA: Settlement agreement places limits alimony modification

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