Around this time of year we at Fiskum Law are often asked about whether a divorcing spouse should file a joint tax return with the other spouse. Our answer is “it depends.”
When you sign a joint tax return with a spouse, you become jointly and severally liable for the tax debt owed. This means that if there is money that is owed and your spouse does not pay it, the IRS will make you pay it.
What if your spouse misrepresents his or her income? What if he or she failed to report some income, and when the income is reported later, it results in a significant tax debt?
If that happens, the IRS can make you pay the debt. If you sign a joint tax return for 2012, you become responsible for any and all taxes and penalties owed in connection with any amended 2012 tax returns.
Can the divorce court enter an order directing your spouse to pay the debt? Yes, it can, but if your spouse doesn’t have any money and you do, the IRS will take it from you.
So, you need to be careful before you sign a joint return. There are benefits, including a lower tax rate, but you need to make sure that there has been full and honest disclosure of all income and debts so that you know what you are committing to. I have developed language that I use in proposed Judgment and Decrees that, to the greatest extent possible, protects a spouse in this circumstance.
Feel free to call me, attorney Dan Fiskum, at (952) 270-7700 to schedule an in-person divorce case analysis. My office is conveniently located in the Carlson Towers at the intersection of Highway 494 and Highway 394 in Minnetonka, Minnesota.