Already Divorced in New Jersey? You May Still Be Liable for Your Ex Spouse’s Income Tax Liability
Some people who get divorced in New Jersey believe that, once they are divorced, they are no longer liable for the
income tax liability that their ex-spouse incurred during the marriage.
Unfortunately, that is not necessarily true.
How can you be held liable? If you have filed a joint income tax return with your spouse, then both of you are jointly and individually liable for the taxes owed on that joint return. According to the IRS, your liability also includes any additions to the taxes owed from that joint return, such as interest or penalties which may have been added on to the taxes owed.
What if, as part of your New Jersey divorce, your spouse agrees that he/she is solely liable?
The IRS simply doesn’t care. If your name is on the tax return, then the IRS can go after you for any amount owed on a past joint tax return.
More often than not, couples who are getting divorced in New Jersey will decide to file joint income tax returns for the last calendar year before the year in which they are divorced, because it will result in a lower tax liability than if they file separate returns.
The problem is they are both responsible for the entire amount owed, even if one spouse has much greater income than the other spouse in that year. It can be a very big problem, if the higher earning spouse decides to stop paying income taxes in the midst of the divorce, because of the financial pressures of the divorce.
There can be severe consequences when you’re held responsible for an unforeseen tax liability. The IRS can garnish your wages, put a lien on your home or levy on your bank account.
You may be able to escape liability by convincing the IRS that you qualify as an “innocent spouse.” However, it is extremely hard to qualify for that designation, because you must prove that you had no way of knowing that your ex-spouse was not paying the income taxes that he/she owed.
This is why it’s critical that you choose a very experienced New Jersey divorce law firm who will make sure that you are alerted as to these types of issues and will make sure that you get the proper advice from a tax professional.
Salvaggio Law Group LLC devotes its entire practice to New Jersey Divorce and Family Law matters.
If you want to talk, please call us at (973) 455-1220 or fill out the Contact Form on our website.