10% Withdrawal IRA Penalty/Gambling Loss

[gamblerswife]

Some advice please. Last year my spouse made several huge withdrawals from our IRA without my knowledge. Now are are processing our taxes and will be hit with the 10% penalty plus income taxes. We will owe a HUGE amount that we do not have. Do I need to protect my 401k? What is my liability as his wife?

[Burke]

Some advice please. Last year my spouse made several huge withdrawals from our IRA without my knowledge. Now are are processing our taxes and will be hit with the 10% penalty plus income taxes. We will owe a HUGE amount that we do not have. Do I need to protect my 401k? What is my liability as his wife?

This is a legal question and you may want to get advice from an attorney. IRA's and 401k's are not in joint names, for one thing. If they are in his name, he has the right to withdraw funds (maybe borrow from the 401k if he is still working). If they are in your name, only you can sign to withdraw funds. The tax liability is joint if you file a joint return, unless you can qualify under the injured spouse rules. You may wish to consider filing separately this year. See a tax professional and/or an attorney as mentioned above.

[Bees Knees]

Agreed.

File a separate return and let the pond scum fend for himself. Unless of course you are trying to enable him to continue to hurt you with his addiction.

[gamblerswife]

Thank you both for your excellent advice. The IRA was in both names so he was able to make withdrawals without my knowledge/signature; however the 401k is in my name only through my employer. I don't want the IRS to put a lien on it to pay off the huge amount we will owe because of his stupidity. I will get legal advice. Thanks again.

[veritas]

The IRA

was not and is not in both your names.

An IRA is an INDIVIDUAL Retirement account.

[Burke]

Thank you both for your excellent advice. The IRA was in both names so he was able to make withdrawals without my knowledge/signature; however the 401k is in my name only through my employer. I don't want the IRS to put a lien on it to pay off the huge amount we will owe because of his stupidity. I will get legal advice. Thanks again.

You are misinformed. An IRA cannot be in both names. You may have had a joint account but if so, it was not an IRA. Regardless, the point of filing separately is so that you are only responsible for your income, deductions, and tax liability.

[Lion]

Seek Help

As well as talking to a lawyer (make sure marital law is one of his strengths), please find a program comparable to Al-Anon for spouses of gamblers. I'm sure you'll find lots of practical advice and emotional support. But, don't forget to see that lawyer. Good luck. Oh, and the IRS offers payment plans; so your husband can work out his own tax payments on his own married filing separately tax return.

[gamblerswife]

Thank you all for the advice. Yes, I misspoke when I said the IRA was in both names - it is in his name only. I also did attend Gam-Anon meetings for families of gamblers and the group was extremely helpful and supportive.

[Lion]

Keep up the good work...

Keep attending. It's helpful to have a support group of those who have been there, done that. I was married to an alcoholic for many years. It's not easy getting out, separating your finances and lives, especially when children keep you connected forever. It's worth the price of that lawyer.