Divorce and tax related question

[AustinDude123]

I got divorced in late 2013 and I am now dealing with my taxes from last year. My ex-wife and I have a disagreement on how to interpret our individual tax liability. In our decree, it states that we will each "be responsible for 50% of the parties combined tax obligation for the calendar year 2013". My interpretation of this was that after our taxes were done, we would take her tax bill and my tax bill, add them together and we would each pay half. However, she has interpreted this much differently. She is taking the overall value of all taxes paid by her during the year (subtracting how much has already been withheld) and combining it with the same for me and then dividing THAT number in half. Unfortunately, this number results in me owing more than $40K more in taxes as she made a lot more than I did last yeaqr. So it really comes down to what exactly does the phrase "combined tax obligation for the calendar year 2013" mean? Is this the amount of taxes owed at the end of the year or the total taxes owed for the whole year after subtracting what has already been deducted? I would appreciate anyone's inputs as I am confused. My own lawyer says that the tax obligation is what is owed at the end of the year but he sucked as my lawyer so I don't believe everything he says.

Thanks for any help,
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[Bali Hai]

I got divorced in late 2013 and I am now dealing with my taxes from last year. My ex-wife and I have a disagreement on how to interpret our individual tax liability. In our decree, it states that we will each "be responsible for 50% of the parties combined tax obligation for the calendar year 2013". My interpretation of this was that after our taxes were done, we would take her tax bill and my tax bill, add them together and we would each pay half. However, she has interpreted this much differently. She is taking the overall value of all taxes paid by her during the year (subtracting how much has already been withheld) and combining it with the same for me and then dividing THAT number in half. Unfortunately, this number results in me owing more than $40K more in taxes as she made a lot more than I did last yeaqr. So it really comes down to what exactly does the phrase "combined tax obligation for the calendar year 2013" mean? Is this the amount of taxes owed at the end of the year or the total taxes owed for the whole year after subtracting what has already been deducted? I would appreciate anyone's inputs as I am confused. My own lawyer says that the tax obligation is what is owed at the end of the year but he sucked as my lawyer so I don't believe everything he says.

Thanks for any help,
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LD (professional tax consultant) has you answer. Stand by.

 

[ecmst12]

You were divorced at the end of the year so you should be filing as single and each be responsible for your own taxes, why did you agree to anything different?

 

[AustinDude123]

You were divorced at the end of the year so you should be filing as single and each be responsible for your own taxes, why did you agree to anything different?

We are both filing as single. However, the divorce happened late in the year and there were tax implications due to bonuses and stock sales so it would have been a nightmare to try and divide those kinds of things up - so we decided to split the overall tax cost.

 

[LdiJ]

We are both filing as single. However, the divorce happened late in the year and there were tax implications due to bonuses and stock sales so it would have been a nightmare to try and divide those kinds of things up - so we decided to split the overall tax cost.

ARG...

I don't know that your agreement is enforceable at all. Your federal tax filing status was single for each of you because you were divorced prior to 12/31/2013.

However based on the actual wording of your decree...I think that she is right. It says "tax obligation". Your tax obligation has nothing to do with your withholding or your estimated payments. It has to do with the actual tax obligation, which is the combined amount of taxes you owed for that calendar year...not the after withholding amount, but the actual amount. Now, I doubt that is what either lawyer intended...but I suspect that they both got it wrong.

Unfortunately, attorneys often get tax issues wrong...which is why I normally encourage people to consult a tax professional before they sign off on agreements regarding taxes in a divorce situation.

You may want to take this particular issue back to court...perhaps with a different attorney.

 

[davew128]

Unfortunately, attorneys often get tax issues wrong

Understatement of the year.

Dealing with a decedent's administrative trust, and the night school graduating attorney was trying to convince me that the sale of stocks in the trust had carryover basis from the decedent's purchase date in 1954 because the decedent had gifted the stocks into the trust...

By that measure EVERY trust has carryover basis after death because by definition all contributions to a trust are gifts.

 

[AustinDude123]

I don't know that your agreement is enforceable at all.
QUOTE]

Do you mean that you don't think what she is saying is enforceable?

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[tranquility]

Wow, while it seems unfair, I don't know what is unclear about it.

"be responsible for 50% of the parties combined tax obligation for the calendar year 2013"

As we all know, the tax "obligation" is not the amount paid after the return is filed, but the amount calculated on the income/deduction/credits. It seems to me the total taxes owed by each party is added together and then divided by two. Then, each party comes up (perhaps through withholding) with their burden. Stupid? Yes. But, it does seem to encompass what the decree says.

 

[not2cleverRed]

I don't know that your agreement is enforceable at all.
QUOTE]

Do you mean that you don't think what she is saying is enforceable?

AD

No, what's she's saying is that your agreement isn't enforceable.

 

[Zigner]

No, what's she's saying is that your agreement isn't enforceable.

True, but she would be wrong. This was an agreed-upon item. There is nothing there that runs contrary to any law, guideline, whatever. The decree is not ordering them to file with an incorrect status.

 

[Ohiogal]

I don't know that your agreement is enforceable at all.
QUOTE]

Do you mean that you don't think what she is saying is enforceable?

AD

I think you need to go back to court and ask for clarification on that portion or ask that it be stricken due to a lack of meeting of the minds.

 

[Ohiogal]

True, but she would be wrong. This was an agreed-upon item. There is nothing there that runs contrary to any law, guideline, whatever. The decree is not ordering them to file with an incorrect status.

It may have seemed to be agreed upon but there was no meeting of the minds as to what that meant. So therefore it could be thrown out/unenforceable on the basis that there was a mistake of material fact.

 

[single317dad]

What I'm reading doesn't seem unfair at all, and really not that hard to figure out. You both determine your tax liabilities for the calendar year. It's there on the form, a couple of boxes above the "tax you owe" or "refund" box. Line 61 on the 1040. Add those together from both forms. Divide by two. Settle up. I'd wager the approximate amount that changes hands was given consideration in the property division.

That said, I probably wouldn't have agreed to this. What if she took actions late in the year that artificially inflated her tax obligation?

 

[LdiJ]

It may have seemed to be agreed upon but there was no meeting of the minds as to what that meant. So therefore it could be thrown out/unenforceable on the basis that there was a mistake of material fact.

That is what I was thinking as well. I cannot imagine that the way it ended up being worded was the intention of the parties.

 

[Zigner]

It may have seemed to be agreed upon but there was no meeting of the minds as to what that meant. So therefore it could be thrown out/unenforceable on the basis that there was a mistake of material fact.

Fair enough