MFJ But Not Married

[travis bickle]

Every time I ponder on this, I find more possible problems for myself and the client. Hopefully I am "overthinking" the situation.

Ms LASTNAME came in yesterday with two CP516s, one each for TY2008 and for TY2009. No problem here, we did as much of the returns as possible but could not complete them because she had more Sch A information at home. She is due to come back Wednesday to finalize.

The CP516s were addressed to her as Ms LASTNAME, but she told me she should actually be Ms MAIDENNAME because she has recently learned "at the time of her marriage, her husband's divorce was not finalized so we were never legally married".
Obviously she has been working with an attorney on this and she said they were going to "get a divorce instead of voiding the marriage because it [the divorce] is easier."

Now the problems are that for TY2006 and TY2007 they filed MFJ but in fact were not legally married. What is your take on how those years should be resolved for her?

I cannot file Form 1040Xs for those years because they received the full amount of the refund. So, if I subtract her portion of the refund from the joint refund received it would appear that she "owes" the difference when she in fact does not.

Injured Spouse SEEMS to me to be the way to go. BUT, she was NOT a spouse since there was no legal marriage, and she did receive her refund, i.e., nothing was held back (i.e., she suffered no injury). True enough, the injured spouse form will allocate incomes, refunds, etc so this PROBABLY should be used, but my mind still wonders.

Or, should she work with the Taxpayer Advocate Office on this?

Lastly, I wonder why her attorney is advising her to get a divorce instead of voiding the marriage. I AM NOT A LAWYER, but it seems to me that a divorce SHOULD only be obtained to dissolve a valid marriage, not to "return to square one", as it were. And, Texas is a community property state, so I wonder if the existence of a "divorce" could come back and backfire on her at sometime in the future.

Your comments on Form 1040X, Form 8379, and the Taxpayer Advocate Office for this situation are welcomed - especially if you have faced a similar instance.

[JohnH]

I think you can toss out 2006, because it's a closed year. But I do see the problem for 2007. If they legally get a divorce in 2011, then that would imply that there was a marriage of some sort prior to 2011 (unless the divorce is somehow back-dated).

Whatever you file, it probably needs a ton of disclosures attached to the return.

[taxxcpa]

Not married

It probably boils down to whether they were eligible to file jointly. If not, then you could prepare 1040X with her filing as single, explaining that the marriage was not legal even under community property state recognition of common law marriage.

[kpangelinan]

I think you can toss out 2006, because it's a closed year. But I do see the problem for 2007. If they legally get a divorce in 2011, then that would imply that there was a marriage of some sort prior to 2011 (unless the divorce is somehow back-dated).

Whatever you file, it probably needs a ton of disclosures attached to the return.

I agree on 2006; just leave that year alone. I also agree that if they are getting a legal divorce, then it's against a legal marriage qualifying them to file jointly, making those returns valid.

It probably boils down to whether they were eligible to file jointly. If not, then you could prepare 1040X with her filing as single, explaining that the marriage was not legal even under community property state recognition of common law marriage.

If they're getting a divorce today instead of fighting the legality of it, (I'm not a divorce attorney) it's almost like you're accepting the marriage as a legal marriage.

I suppose we don't have all of the information, but if I'm reading your post correctly, 07 was filed correctly as if they were married (divorce is pending today), and that would make it a correct return and you wouldn't need to address that one at all. Same goes for 08 and 09, but since neither has filed those years (or your client anyways-not sure if the CP516s were on one or both), file married separate returns.

[erchess]

Practical Advice

I believe you work for a large company. It's also obvious from your office location in Texas that you have a chain of command above you even without bringing in corporate hq. I think I would get someone I respected as a knowledgeable tax person to give detailed written guidance before I would proceed with this case. My problem here is that if it's possible for them to divorce then surely the authorities view them as married. So what's the problem if they let it ride? They (I hope reasonably) believed that he was divorced and they then got married so they just as reasonably thought they had a valid marriage. I just can't see them getting in trouble over this. On the other hand given where you work you ought not to take this decision upon yourself alone. CYA with people at higher pay grade than yourself.

I work for myself now but I'd get a purchased opinion with cites from somewhere and talk to the legal department at my E & O Carrier before proceeding on this case. The good part about working for someone else is that one need never take ultimate responsibility for a decision with which one is not completely comfortable.

[travis bickle]

Thank you for the comments and

advice. I want to interject here some further information to perhaps refine this situation.

1) As erchess pointed out, I do work for H&R Block. And I am one of their senior preparers in my city [14 years - BUT no Corp/Gift/Estate tax experience, only individual]. Unfortunately, this woman is a NEW client to H&RB who did her own returns prior to this event and therefore our "chain of command" does not afford her any free company assistance.

2) I am not yet certain that 2006 is a closed year. Yes, three years is the normal amount of time to claim any additional refund, etc. BUT there are instances that I know of where more than three years is allowed (e.g., if a replacement property for a condemned property needs to be changed; or taking a foreign tax credit as opposed to listing it on Sch A, etc). So, because there are issues that allow "more than three years" I will need to do much more research to see if this is true in this situation.

3) I do not see how a Form 1040X can be used in any situation, because:
a - the amount shown in Col A is the amount originally reported;
b - the amount shown in Col C is the correct amount;
c - obviously these two figures will differ, so the DIFFERENCE WILL APPEAR IN COL B AS AN AMOUNT THAT SHE OWES. No, she does not owe it.
second scenario -
a - Since TX is a community property state what happens if the IRS maintains that all figures be split 50-50 instead of allocated per taxpayer? She may wind up owing money again.

4) I AM NOT A LAWYER - I believe that the BEST solution is to VOID the original invalid marriage, and then have her file for TY2007 S status, with an explanatory letter.

Keep them coming, your comments do NOT fall on deaf ears

[okie1tax]

MFJ but Not

Travis, Have you thought of submitting your question to The Tax Institute? I thought that was one of their purposes, to answer these "hard" questions.

[travis bickle]

Thank you ...

Travis, Have you thought of submitting your question to The Tax Institute? I thought that was one of their purposes, to answer these "hard" questions.

I had not considered that course of action (why not??).

I have however discovered an interesting piece of Texas law -
In Texas, you can have your marriage declared VOID if your putative spouse was married to someone else when s/he married you. HOWEVER, if you stay married to the person and they dissolve their first marriage, then you automatically become married to them when the first marriage ends.

So, now I have to ask her WAS HIS FIRST MARRIAGE/DIVORCE EVER FINALIZED?

Sure glad I just do taxes and do not practice law.

[Burke]

Sure glad I just do taxes and do not practice law.

We may not "practice" it but we sure do deal with it all the time in this profession. All tax code is law passed by Congress. That's what I find fascinating about this job. Good for you on finding the Texas law quirk. That may be the answer here.

[travis bickle]

Yes ...

We may not "practice" it but we sure do deal with it all the time in this profession. All tax code is law passed by Congress. That's what I find fascinating about this job. Good for you on finding the Texas law quirk. That may be the answer here.

it might be the answer.

BECAUSE if he finally finalized his first divorce on any date in 2006, then on 12/31/2006 they were legally married and they were correct to file MFJ !!!!!!!

Now, I have to wait until Wednesday for her to return to find out the answer to that question.

By The Way ..... I personally do not think it is a quirk ONLY in Texas law. Think about it, if an individual in state XX does what this guy did, it would seem to me that his second "marriage" would have to be valid the same way as it is in Texas -- otherwise, the scoundrel would get out of BOTH marriages (BUT .... I will gladly leave that to the legal beagles)

OT -
saw this bumper sticker the other day:
I WOULD TELL YOU TO GO TO HELL
but I work there and don't really want
to see you all day

[Davc]

By The Way ..... I personally do not think it is a quirk ONLY in Texas law.

It could be a Common Law Marriage quirk. It sounds as if they met the criteria for a common law marriage as soon as the divorce from the man's first spouse was final.

[JohnH]

I still think 2006 is closed, provided she filed on time (either with or without an extension). I'd be very surprised to learn that erroneous filing status would reopen a closed year. So I think your only concern would be 2007 insofar as amending is concerned. And 1040x would be the correct form because even if the income is the same, the lines for the tax liability would change.

[oceanlovin'ea]

my brother

Many many years ago my brother married a woman because my mother owned the home he was living in and she told him he couldn't live with anyone in the house he wasn't married to.
So they applied for a marriage license and went to a justice of the peace and got married, but they never registered the marriage. So the question became were they marrried or not?

A few years later she married another man. Then she tried to kill him with his medication. But it didn't work. My brother was going to claim she was a bigamist but he couldn't find the marriage license. (She probably had it). He also decided it was best to leave it alone. If they weren't married legally, she had no claim on anything that was his and was no part of our family.

People really get themselves in a big mess when they are NOT careful about who they get involved with.

Linda

[kpangelinan]

I still think 2006 is closed, provided she filed on time (either with or without an extension). I'd be very surprised to learn that erroneous filing status would reopen a closed year. So I think your only concern would be 2007 insofar as amending is concerned. And 1040x would be the correct form because even if the income is the same, the lines for the tax liability would change.

I'm with JohnH here.....on 2006 anyways....I'd leave that one alone. It's closed and doubt it would ever be reopened.

[BP.]

People really get themselves in a big mess when they are careful about who they get involved with.

Linda

Funny one, Linda!