2011 MFJ; divorced in 2012; underreported income in 2011

[Bill Tubbs]

Waiting for return call

The first two things to do are, ask your client if she knew about the distribution and see if there might have been a rollover.
Depending on the answers, you would then continue to see if the ex is going to pay the tax or if you are going to do the paperwork to file for innocent spouse, or advise your client to be ready to pay some or all of the tax.

Thanks. Been a few days and I haven't heard back from her yet. I'm thinking I may just refer her to someone who has a full-time office -- I work tax prep for 3 months; then as programmer the rest of the year -- unless it was a roll-over.

[Kram BergGold]

What I would do

The first two things to do are, ask your client if she knew about the distribution and see if there might have been a rollover.
Depending on the answers, you would then continue to see if the ex is going to pay the tax or if you are going to do the paperwork to file for innocent spouse, or advise your client to be ready to pay some or all of the tax.

[Gary2]

You didn't say how amicable it was, but the safest route is to have your client's lawyer contact the ex's lawyer.

[Bill Tubbs]

Clients were married at the end of 2011 and decided to have me file them MFJ. They divorced sometime in 2012 and one of them decided to remain my client; the ex-spouse decided to self-prepare. Now, the one that remained my client gets a letter from the IRS (CP2501 I think) that an over $100k 401(k) disbursement was not reported on their 2011 return (1099-R, Code 1) -- that 1099-R belonged to the ex-spouse (no longer my client). Without that income, their AGI was under $60k, so the result is a gross understatement of their 2011 income. There was some withholding but not much, so even with the withholding, they would now owe $27,000.

I know that Innocent Spouse _may_ be an option if my client didn't know about the $100k disbursement (there was another $30k 401(k) disbursement that was reported).

Any guidance on how I proceed here now that they're divorced but this is for a year in which they were married? (I have not yet asked her how much she knew about the $100k 1099-R that they did show me last spring.)

Bill