Divorce, Taxes, and the IRS

Excerpt : Copyright 2006 The Divorce Center P.A. In Divorce, potential tax liability can frequently become the tool for one spouse to use against the other spouse. If improperly used, this tool can destroy


Copyright 2006 The Divorce Center P.A.

In Divorce, potential tax liability can frequently become the tool for one spouse to use against the other spouse. If improperly used, this tool can destroy all of the marital assets. In the worst case, tax liability can seriously impact the future financial security of either spouse and subject them to criminal sanctions.

Situation 1 - Your Spouse Owns a Business

The most common situation where taxes become an issue in a divorce is they there is a family business. The owner - spouse may have hidden cash receipts or engage in a practice of recording inflated expenses. This common practice by many business owners is a fraudulent attempt to minimize taxes. The other

Practical Solutions To Divorce & Custody Concerns Also see : Helping Children to Cope with Divorce If you are a responsible parent facing the minefield of divorce, a prime concern will be helping your child cope with the process. If, on the other hand you are a parent who believes that old chestnut, "My child isn't bothered” or "kids take things...read more Forget divorce court - most Florida divorces never make it to court Copyright 2005 The Divorce Center P.A. Conjure up an image of divorce. The average person visualizes people sitting in a courtroom, giving testimony, with a judge at a bench presiding over everything. But the actual reality of most divorces...read more

spouse is often aware of and approves of this practice. During the marriage, minimization of taxes results in higher household income and a better lifestyle for the couple.

This practice is illegal or borders on illegal. During the marriage it is a secret between the married couple. But during a divorce each spouse may try to use past tax behavior to gain an advantage. The owner - spouse wants to minimize past income in an effort to lower child support, alimony, or division of marital property. Of course the other spouse wants to prove the opposite.

The result is a game of chicken - with one spouse threatening to turn the other spouse in to the IRS. This is a dangerous game for all involved. Do it yourselfers will

Also see : Divorce and Your Credit - Some Tips to Help Your Credit History Survive Divorce Your credit rating may be your most important asset. Many people do not realize the effect a divorce can have on personal credit. When they do, it is often too late. Don't let this happen to you. If you are currently involved in a divorce, or if...read more Divorce - Contested Or Uncontested Most often a divorce is contested when the man and women cannot find a common consensus. Most of the disagreements concern the Children, Visitation and how to divide the assets of the marriage along with Child Support, Alimony, How to deal with...read more

find the situation blowing up in their face. People with attorneys may find the attorney reluctant to deal with the situation.

The Potential Problems:

* Your Attorney cannot assist the owner/spouse commit the crime of tax evasion. * The non-owner spouse may end up liable for half of the back taxes, penalties, and fines. * The divorce court Judge may decide to turn everyone in. * In an extreme situation, everyone can go to jail.

Situation 2 - You Make a Surprise Discovery: Your Spouse is a Tax Cheat

Another common situation in divorce: the sudden realization that a spouse is a tax cheat - and you were completely unaware until the divorce.

The Potential Problems:

* You may end

Also see : How To Prevent Divorce The failure of marriage may be the cause of inconsistency among couples in communicating and interacting with one another both physically and emotionally. Couples tend to hate each other when they do not compromise each other’s mistakes. This...read more Marriage Problem; Is Your Marriage Problem Severe Enough To Warrant Getting A Divorce? Having a marriage problem can be agonizing especially if you're trying to do all you can to make your marriage work. Depending on how your marriage was prior to thinking that you had a marriage problem, you could be in for a hurtful time if you...read more

up owing the IRS half the overdue taxes. * You may end up owing the IRS the ENTIRE tax bill. * The overdue tax bill may be double the actual unpaid taxes, due to penalties, fines, and interest.

The Potential Solution:

The IRS has a provision called Innocent Spouse Relief. This provision gives complete or partial tax forgiveness to an innocent spouse. But be aware - the definition of "innocent" is technical, elusive, and difficult to understand.

Two available forms of tax relief:

* Innocent Spouse Relief - Discharge of Liability * Separate Tax Liability for Each Spouse

The first form of relief wipes out your tax debt in part or full. You must have not had any knowledge of the incorrect

Also see : The 7 Common Myths of Divorce Copyright 2006 The Divorce Center P.A. 1. One lawyer is a good as another. There is a tremendous difference between lawyers. Some are down to earth and some are distant and hostile. Some call you back the same day and others wait 5 days to...read more When To Use A Divorce Lawyer And When To Avoid One The topic of divorce is never pleasant and usually painful, but if you find yourself at the end of a marriage, it may be your only logical options. Individuals choose to enter divorce proceedings for a variety of reasons, but usually the more...read more

or fraudulently prepared tax returns. That means you cannot look like you were aware of any part of the return. Also, you must not have benefited from the hidden income. That means you cannot be driving a Mercedes and at the same time signing a tax return that show $200/week in income.

The second form of relief is slightly easier to get. If you qualify, the IRS will separate out the tax liability of your income from your spouse's hidden income. This type of relief may have the effect of wiping out extreme tax bills and penalties.

The Bottom Line: Always be aware of these types of tax situations. The financial effect can be far worse than the divorce. If you believe this type of problem is in your future, start

Also see : 3 Major Divorce Parenting Mistakes And Learn How To Avoid Them What 3 major divorce parenting mistakes that surely lead to unhappy, unhealthy and unsuccessful children? Parents know these for your children seek. 1. Failure To Act According To Child's Best Interest This divorce parenting mistake stem...read more Joint Custody in Divorce There had been a growing trend, in Ontario, in family and divorce law, over the last few years, for family courts to order joint custody of children. The hope, by some, was that the parenting skills of the parties could be improved with awards of...read more

preparing immediately. Do not sign a joint tax return for your upcoming tax filing. File married-filing-separately. The moment you suspect a potential tax liability, begin to separate your financial life from your spouse's financial life and then promptly file for divorce.

About the author:

Divorce Attorney Howard Iken has a rapidly growing divorce practice in the Tampa Bay area of Florida. He can be reached at 727-844-7676. More information on divorce can be found at http://www.18884mydivorce.com More information on Divorce Attorney Howard Iken can be found at http://www.18884mydivorce.com/pub/Aboutus/aboutus.htm

Now You Can Stop Your Indecision & Pain About Whether to Stay Married or Get a Divorce!

More Divorce Articles

Divorce Advice | sitemap
copyright www.seekdivorceadvices.com 2006