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Tax Information With A Mother's Touch
Published by Eva Rosenberg, MBA, EA
Volume 3 Issue 121 July 13, 2001
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Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA Volume 3 Issue 121 July 13, 2001 |
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» From: St. Louis, MO Dear TaxMama, My husband is self-employed. The business is listed in both our names. I am separating from him next month, with plans to divorce within the next year. I don't want his business, don't want ½ the business, don't want it liquidated for an asset split ... he can have it. I want my name off the business as a co-owner. My concern is the tax situation. As a self-employed person, we are supposed to estimate tax quarterly and pay that to the gov't. He doesn't do that, and so come April we always owe a lot, cannot pay the full amount, and the IRS sets up a payment schedule for us to pay last year's taxes during the course of the next year. I currently claim ZERO on my W-4 to aid in the IRS getting all the money they can from us, but when I live on my own I will most probably want to change that to get as much money in my paycheck as I possibly can. I realize that I will be responsible for taxes incurred in 2001 because we will still be married as of Dec 31 2001. What will my responsibilities be regarding the business? Will it matter if I get my name off there b/4 Dec 31 this year? Once my name is off the business, from that point forward I am NOT responsible for taxes incurred after that date, right? I realize I could be responsible for back taxes and what is the situation there? Will they go after him first and foremost? At what point will they come after me? Thanks for the advice. Maya  First of all, hire a good tax professional to help you deal with some of the planning for your divorce. Quite frankly, just because you are still not divorced at 12/31 does not mean that you must file together. You may file as married, filing separately and, since I don't believe that MO is a community property state, you may not have to pick up any part of his income on your tax return. (But, don't rely on this statement - FIND OUT from someone locally!) You'll find some excellent information and resources to help you, along with some support from others in your position, DivorceMagazine.com Oh and look at this! DivorceInfo.com But seriously, spend a little time with a good tax pro NOW. S/he'll save you a fortune in taxes and may be able to give you some guidance on how to handle the dissolution properly. While you will find a link to the forms to do your own divorce, I do suggest that you have an attorney draw up the papers to remove each of you from the title to homes/business, etc. AND to file the proper announcements to relieve you of any of his debt. As to the back taxes, IRS will go after whoever has any money or liquid assets (things like bank accounts, savings, stocks, etc). They will take YOUR refunds - so change your withholding to ensure that your refunds are minimal. You may qualify for Innocent Spouse Relief, but only if you were totally uninvolved in the business and didn't really benefit from its income. A good tax pro can help you navigate those waters. You may also be able to talk to IRS and get and Offer in Comprise. That would a) limit/define for how much of the back taxes they hold you responsible. b) Perhaps reduce your whole balance due to an amount you can borrow from family, friends, boss, bank....and pay off in one shot. or c) set up an installment agreement to pay (a) over time. And then, there's always bankruptcy. But I'd hate to see you start your new life with that stigma. Good luck! And take care of yourself! Best wishes Eva Rosenberg Your TaxMama  |
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| Library of Congress - ISSN 1532-0790 Copyright © 2000-2009 - Eva Rosenberg |
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