Nancy L. Sponseller

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Mingling taxes after divorce: a dangerous decision

On behalf of Law Office of Nancy L. Sponseller posted on Sunday, January 12, 2014.

Many couples in Ohio and elsewhere are quick to move towards disentangling their lives as soon as divorce proceedings begin. However, some couples continue a kind of financial intimacy by filing a joint tax return corresponding to the last year of the marriage. This move may seem sensible, but it can be very risky. A dramatic illustration can be found in a recent divorce case in which the husband gave his former wife his tax information with the understanding that she would file a joint return, as the couple had routinely done throughout their marriage.

In this instance, the ex-wife instead filed her own return for “married, filing separately.” She made a return for the ex-husband, too, listing him as single and altering some numbers so a refund of over $3,000 was issued. However, the couple used two bank accounts. Both were joint accounts, but the husband used one and the wife used the other. The wife had the refund issued to her account, and she was able to obtain additional money intended for the husband. She used this money to establish her new household.

The husband was eventually able to determine what happened and to rectify the issue, but it took considerable effort and conversations with the IRS. In the final settlements of the divorce, the money that the ex-wife had claimed was factored in to final spousal support decisions.

Taxes can be complex enough on their own. When the intricacies of divorce are added, it can be much more difficult to manage the strain of filing taxes and disentangling individual finances. Speaking with a lawyer who has experience working with divorcing couples can benefit those who are facing divorce but having issues with separating finances.

Source: Forbes, “Post Divorce Tax Intimacy Can Be Riskier Than Post Divorce Sex“, Peter J Reilly, January 07, 2014