Tax Rules on Annulments

Any change in marital status -- whether you're getting married or divorced, are widowed or obtaining an annulment -- means a change in your federal tax obligations. Sometimes this necessitates only a simple switch from a married, filing jointly category to a single or head of household category, along with the accompanying change of tax brackets. In the case of an annulment, however, Internal Revenue Service rules require that you deal with previous years' filings to make any corrections necessary and pay any additional taxes due.

Various churches throughout the world grant religious annulments to married couples under specific circumstances so that a parishioner can remarry. In the U.S., each state has established its own rules regarding legal marriage annulment, and most are strict. In general, a judge will grant a legal annulment only if the marriage was fraudulent, forced, bigamous, incestuous or unconsummated. Other acceptable reasons are the incompetency or underage status of one of the parties.

The annulment must be legally obtained through a court of law to affect your tax status, since the IRS does not recognize church law. A court decree of annulment makes a marriage not only invalid but nonexistent, as if it never occurred. Therefore, a couple who have been filing taxes jointly during the period of their marriage must revisit those filings and amend them. According to IRS rules, you must file Form 1040X titled "Amended U.S. Individual Income Tax Return," for each year that you filed as married that is not closed by the statute of limitations. In general, this limit applies to returns filed more than three years before the annulment decree.

If you assume custody of the children from an annulled marriage, you may be eligible for head of household tax benefits, such as the child tax credit. As of 2011, the child tax credit ranges from $300 to $600 per child for single head of household filers and between $600 and $1,200 for joint married filers, but it begins phasing out at $75,000 in annual income level for a single person and $150,000 for married joint filers. Your former income as part of a married couple may have prevented you from taking this credit in the past. If so, you have the opportunity to benefit from the credit on each of your amended returns.

Another consideration when you are submitting amended tax returns after an annulment is whether you qualify for the Earned Income Tax Credit (EITC). As of 2011, the income limit for taking EITC is $41,132 per year for married couples filing jointly and $36,052 for single or head of household filers with one qualifying child. Therefore, if your joint income disqualified you from taking EITC in the past, your single income may make you eligible for those years you missed, and you can claim this credit on your amended tax returns.