1 : A divorced couple have an agreement that the ex-husband will pass 50% (after tax) of any commission through to his ex-wife. He made an error on his tax withholding and owed $60,000 to the IRS for tax underpayment. He paid the IRS and is asking that his ex-wife repay him the $30,000 (half of what he owed the IRS). This situation presents several questions. Is the ex-wife obligated to pay the ex-husband the $30,000 for his taxes owed?
2 : If she does pay him can she deduct this as taxes paid when she prepares her 2013 return?
3 : Because he withheld too little in taxes and therefore passed more than he should have to his ex-wife, should she repay the amount of overpayment instead of paying the $30,000 in taxes?
4 : Is she required to repay this amount to her ex-husband? Also, will the ex-wife have to report the commissions as taxable income on her 2013 return? There is a separate payment for spousal support.
Answer :
1 : It depends; as long as you have gotten a divorce, dealing with your ex spouse’s unpaid taxes is probably the last thing on your mind. However, the IRS holds both taxpayers equally responsible for unpaid tax debt when the income tax return in question was filed as married filing together. So, if your ex has unpaid tax debt from a return that was filed jointly, you will need to deal with it because it is as much your debt as it is theirs. Fortunately, there is a method to deal with the tax debt through the IRS’s innocent spouse relief program; the innocent spouse program basically allows you to claim that you are not responsible for the tax debt of your ex-husband in a number of circumstances. There are several requirements that you must meet in order to qualify for innocent spouse relief under the IRS.1) you must not be legally obligated to pay the tax debt that you are attempting to claim innocent spouse relief from. Essentially, you cannot claim innocent spouse relief in order to get out of paying your own portion of the tax debt and leaving your ex husband footing the entire bill. 2) you must have reported any and all legally reportable income on the joint return that you filed with your former husband. If you did not report your income in the joint return, or if a portion of it was excluded because you did not want to report it in an attempt to lower your tax liability, you will not be able to claim innocent spouse relief, and you may be guilty of committing tax evasion or filing a fraudulent return. 3) you must have made payments or at least reported payments, income, and claimed any tax credits on the joint tax return. Again, these types of activities are all part of a normal tax filing, so if you filled out your tax forms honestly and completely, you should be able to meet the requirements for innocent spouse relief and gain some relief from the unpaid tax burden of your ex spouse. If you have specific questions about relief from having to pay your ex-spouse's unpaid tax debt, consult with an experience tax attorney in your local area for more info in detail. Your attorney can provide you with more specific details about dealing with the IRS and proving that you should not be responsible for the back taxes owed by your former spouse
2 : Then, no ; she can’t deduct her fed tax liability on her return. She can deduct her state tax liability a long as she itemizes deduction on her fed return on Sch A of 1040. One of the tax deductions the IRS allows is for state income taxes you pay or state sales taxes, but not both. If you live in a state without an income tax, you can still claim the state sales tax deduction. To claim the deduction for state income taxes, you must itemize your deductions, which means filing your taxes using Form 1040 and not claiming the standard deduction.
3 : As mentioned above; it depends.
4 : As mentioned above; it depends. UNLESS she receives the commissions from her ex, she doesn’t need to report it on her return.
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