Divorces can Lead to Tax Penalties

I was reading an article the other day about Rick Jones, former Triad Industries owner, his divorce, and his tax problems. When he and his wife Dorothy Jones divorced, Rick negotiated a settlement with the IRS to reduce the tax liability and sentencing. What he didn’t tell his wife is that she’d be expected to pay $1.3 million in tax penalties after their divorce settlement, even though he committed the income tax evasion and he negotiated the settlement without involving her at all.

This is an extreme example of the type of thing that can come out in a divorce. Rick intentionally left Dorothy in the dark about the tax scenario, but since they filed taxes jointly during their marriage, they were jointly liable for the tax penalties. She negotiated a divorce settlement with him without this knowledge, thus putting her in a very uncomfortable position financially. The sentencing still hasn’t happened, and their divorce and the tax situation is still up in the air.

Folks, this is one prime example of why you need an attorney to help you negotiate your divorce. Dorothy had a clause in her divorce settlement that protected her from being taken advantage of in this manner, so Rick was unsuccessful in negotiating a settlement and leaving her with the bill.

Whether or not you know all your spouse’s financial details, it’s vital that you have an experienced divorce attorney looking out for your interests and protecting you in the event that your spouse should attempt to spring something like this on you. And when it comes to taxes, if you file jointly, you’re jointly liable, even after your divorce. You need a good divorce attorney to get all these details ironed out so you don’t have to worry about it.

Beyond joint tax liability, though, divorce can expose you to other tax penalties, too. If you get support from your spouse that boosts your income up to the next tier, you may owe more in taxes. Additionally, if you sell a property and split the profit, you’ve got to pay taxes on that profit as income. Make sure you work with an experienced professional to protect you from all this potential trouble.