I have a question regarding owing back taxes and a divorce

[makiesha1990]

My divorce was finalized in April of 2017. We currently still owe the IRS $600. We are on a payment plan but the plan won't cover what we owe. First, since we were married for part of 2017, will we file taxes as single/head of household (since we have 2 children together and each claim 1), or do we file as married filing separately? Also, our marital settlement agreement says we are both responsible for our debt debt equally. Last year our small refund was applied to our bill. I'm assuming the same will happen when we file our 2017 return. How will the IRS take form our returns? Will they just split the bill between the both of us, or will one return be withheld?

[Opus 17]

If you are divorced as of December 31, you must file as divorced, you are not married for part of the year.  You will file as single or as head of household if you have a qualifying dependent and meet the other tests.

If the debt is from joint returns you filed together when married, the IRS can collect from either spouse even after the divorce.  The IRS can collect from whomever has money, they don't have to collect 50/50 or honor your divorce agreement.

However, if the IRS does collect more from you than you think is your "fair share", you can file a claim for separation of liability or equitable relief asking the IRS to divide the debt equally.  https://www.irs.gov/businesses/small-businesses-self-employed/three-types-of-relief

If you end up paying all the debt and the IRS does not grant a request for separation of liability or equitable relief, you would have to pursue your ex in the family court to recover his share of the debt from him.

[makiesha1990]

I didn't know I could request a separation of liability. Thanks for that info! I will talk to my accountant about that.

[Critter]

That is a long hard battle ... since you only owe $600 I would try to just get that paid off before either of you file a return.  The IRS will take the entire amount from the first one who files so I would make sure I was not the first one thru the gate.

[makiesha1990]

Ah ok. Thanks

[Critter]

First, since we were married for part of 2017, will we file taxes as single/head of household (since we have 2 children together and each claim 1), or do we file as married filing separately?   Your filing status is based on the marital status as of 12/31/17 ... so if you are divorced by then you will not file jointly. You will file single or  HOH if you have a qualifying child to claim.

Also, our marital settlement agreement says we are both responsible for our debt debt equally.   Last year our small refund was applied to our bill. I'm assuming the same will happen when we file our 2017 return. How will the IRS take form our returns?   Will they just split the bill between the both of us, or will one return be withheld?   Until the debt is paid they will take 100% of each of your refunds no matter what the settlement says.   Good luck in getting the other party to reconcile who owes what after the divorce. 

May I highly suggest you make sure you don't have a refund so there is nothing to take. 

[Critter]

I highly suggest that this debt is paid off before the divorce is final.

[makiesha1990]

I tried to get as close to breaking even as possible. I think I'll be getting around $1,000 back. Thanks for your input!