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Financial Planning / Tax Strategies


Subject:  Re: Uncooperative, Signature Date:  3/30/2013  3:08 AM
Author:  ptheland Number:  118213 of 127747

I live in CA, so community property state. I have run the MFS vs. MFJ scenario a few times on my own taxes (the software asks a few questions, and I get the comparison). And while it's "roughly" the same, it's still a non-trivial $ amount that it would cost us to do MFS.

I suspect that you have some separate property involved OR you're making a mistake somewhere. Without separate property, everything in the community is split in half and the taxes should be within rounding errors of equal. As I think about it more, IRA contributions could be affected, too.

Prior to divorce, can't they go after any jointly held assets?

Sure. But all he'd have to do is change the title on bank and investment accounts to be in his name alone. Technically, they would remain community property. But from a practical standpoint, the IRS will probably not go after accounts titled in his name alone unless the dollars involved justify the additional legal support they'd need to go to show it's community money and not his separate property.

After divorce, I would expect she would have assets and/or alimony from the divorce settlement...

Sure. But divorce lawyers are notorious for ignoring tax implications of the various financial arrangements in a divorce. And divorce judges pretty much let people suffer the consequences of poor representation in that area.

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