Back taxes in a divorce may be considered marital debt just like credit cards and car loans are. This allows the court to divide back tax debts in accordance with state divorce laws. This could mean you end up owing more than you are personally responsible for accumulating or may only be responsible for paying your own back taxes, if any.
Tax Filing Status
Your tax filing status is set on the last day of the fiscal year, Dec. 31. If you filed your taxes separately from your spouse, any tax debt associated with the return may stay your sole responsibly in the event of a divorce. If you and your spouse plan on filing for divorce, it may be smart to do it before the end of the fiscal year so the two of you can file using the "single" tax status. This can avoid any ambiguity when attempting to divide other debts and assets during official divorce proceedings.
Ten states across the country have community property divorce laws. These states consider debt accumulated over the course of the marriage as marital property. This means debt, including back taxes, may be divided evenly among both spouses in a divorce proceeding. An exception occurs to this general rule if either spouse entered into the marriage with prior tax liability. This debt may remain the sole possession of the spouse because it was in his name when the marriage occurred.
Equitable Distribution States
All other states in the United States use equitable distribution regulations to determine how debt is divided in a divorce. This method divides debt, including back taxes, in accordance with each spouse's ability to repay the obligation. If you are the highest wage earner in your marriage, you could end up with a larger share of the tax debt even though you may not be personally responsible for accumulating the debt. A court may choose to compensate you in other ways in exchange for taking the larger share of debt, including granting you possession of certain property like a family-owned car.
Future Tax Responsibility
If the IRS determines an underpayment for any tax year over the life of your marriage, the tax organization may issue a deficiency notice requiring both you and your spouse to pay the debt. This can occur years after your divorce, long after all other debt was formally divided. The IRS has the power to pursue both spouses for the total amount of debt owed even if you weren't aware of the tax obligation. The only way to limit your liability for this debt is to file an appeal with a district tax court having jurisdiction in the hopes of eliminating or shrinking the debt.
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