Barry Dolowich, Tax Tips: Should I sign this tax return?

Question: My divorce attorney and my accountant are pressuring me regarding my 2022 tax returns that are due to be filed in October. I find myself with the decision to file a joint tax return with my soon-to-be ex-husband or file separately. I have been told that filing separately will cost us much more tax dollars collectively than filing jointly. We will owe substantial taxes for 2022 and we still have unpaid back taxes. Please note that I am a stay-at-home mom with no income or earnings. Will I be liable for the taxes owed if I sign the 2022 joint tax returns? Should I file separately and refuse to sign a joint tax return?

Answer: For the years that you and your husband filed tax returns jointly, both of you are jointly and severally liable for the taxes. This means that the IRS can go after you for the full amount of tax due. However, the Internal Revenue Code does have provisions for “innocent spouse” relief that require a specific filing procedure to absolve you personally of the tax liability. Generally, the quicker you act to file for “innocent spouse” relief, the better your chances of achieving your objective.

Regarding the signing of your 2022 joint tax return, I recommend that you consider the risk of adding additional personal liability to your already tenuous situation. I also recommend that you immediately seek legal counsel. You have the option of using the filing status, “Married filing separately” for 2022, and thereby limiting your liability to just your taxes, and not your husband’s taxes. Also, please note that California is a community property state and you may be required to report one-half of your husband’s income on your tax returns (speak to your income tax preparer!).

It would be a gross understatement to describe a marriage separation as an emotional trauma. It is often far more traumatic for a non-working spouse who has been dependent upon his or her partner for support. In addition to the emotional burden of losing a mate, one has to deal with the additional financial uncertainty.

Also, surround yourself immediately with a team of professionals that are INDEPENDENT of your spouse. Obviously, you must interview a few from each discipline and have complete confidence in your choices. Your professional team may include an accountant, family law attorney, estate tax attorney, life insurance agent, health insurance agent, investment advisor, and a real estate agent.

One of the fastest ways of removing the pain and anxiety of separation or divorce is to realize the satisfaction of being independent. Being financially independent and secure is a giant step in the direction of total independence. Good luck!

Barry Dolowich is a certified public accountant and owner of a full-service accounting and tax practice with offices in Monterey. He can be reached at 831-372-7200. Please address any questions to Barry at PO Box 710 Monterey, CA 93942 or email:[email protected]