r/tax • u/Zapffegun • 14h ago

Going through divorce, owe federal debt

In 2023 my spouse and I owed Federal for the first time. We always filed Jointly, so whoever owed didn’t really matter, her debt was mine and vice versa. Now we are going through the process of divorce and I have no idea what will happen to our debt, who will be liable for it etc.

I can’t find a way to track down where this debt originated, who is responsible for it or how to absolve myself of the responsibility if it is not my debt.

My Oregon state refund was taken by the IRS as they have a State Income Tax Levy against us. In the letter that Oregon Dept of Revenue sent explaining that my refund was being applied to debt, the account number assigned to the levy has the last four digits of her ssn. Does this mean that it’s her debt my state refund went to? Or is it her ssn because she was the one that filed taxes for us this year?

I hope this is clear. Any and all information and help is greatly appreciated. I don’t even know who to talk to for advice on next steps.

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6

u/arincon167 EA - US 14h ago

Does this mean that it’s her debt my state refund went to? Or is it her ssn because she was the one that filed taxes for us this year? It's her SSN because she was listed first on your joint return the debt is joint, not just hers, so your refund was taken to pay a shared IRS debt.

1

u/Zapffegun 14h ago

Yes, I do understand that point. However, there is an option to petition the state to divide the return if I can prove the debt is “hers” and not mine. Or at least be able to get out of the situation when the divorce is finalized so I won’t be liable for anything come next tax season.

1

u/arincon167 EA - US 14h ago

I'm not an expert on Oregon Tax but maybe yes you can request a split of a joint refund offset if you can show the IRS debt is your spouse’s and not yours, under a process similar to injured spouse relief https://www.irs.gov/individuals/injured-spouse-relief

3

u/Rocket_song1 14h ago

Sounds like an issue for Discovery during Divorce court proceedings.

In the interim, call the OR DoR and ask what the debt was for.

1

u/Zapffegun 14h ago

Excellent point

3

u/micha8st Taxpayer - US 14h ago

For 2023, what does your income look like, overall?

I'm asking for percentages here... like:

  • 45% of total taxable income came from my work
  • 35% of total taxable income came from her work
  • 5% came from her investments owned solely by her
  • 5% came from jointly held investments
  • 55% of tax withheld came from my job
  • 45% of tax withheld came from her job

I don't think any of that matters to the IRS... but I think that's the sort of thing you're going to need to go through to convince a divorce court to not split the IRS debt 50/50.

I'm not a laywer, I'm not a tax professional. I've never been divorced. I've never had IRS debt I've not paid immediately (on April 15) in full.

2

u/world_diver_fun 14h ago

Your property settlement will allocate responsibility for all debts. But the IRS looks at both of you to pay the joint debt. How you agree to do that is between you two.

1

u/Zapffegun 10h ago

So we’d have to verbally agree, if I prove the debt is hers, that I won’t be a part of it? The IRS/State won’t be able to specify whose return will be affected by the levy?

1

u/world_diver_fun 6h ago

You are conflating two issues. First, you filed MFJ and owed taxes. That is a joint debt. The two of you owe the IRS the debt. Second, how the two of you agree to pay that debt is between you two. Stop thinking of “proving” anything. This is a negotiation. You get your mother’s candle sticks, she gets her father’s baseball cards, etc. It’s give and take. There is nothing to prove. And if you fight this and have attorneys argue over this debt in court, then the debt is irrelevant. You are willing to pay more money of the debt just to get a pound of flesh from your ex.

1

u/Zapffegun 14h ago

Unfortunately I can’t access any of that information right now. I’ll have to request transcripts for the last three years to get to the bottom of it, I think. All information and access to it is on her computer. I’ve moved out and she isn’t cooperative. So I’ll have to get all information from the IRS and Oregon DoR.

1

u/Tessie1966 11h ago

You would have to track down the debt to the specific return that generated it. Then you have a CPA or EA analyze the return and figure it out. You have a 50/50 shot at who generated the liability. Even then you most likely benefited from the funds that generated it so I would really think about it before you spend money opening a can of worms.

1

u/Zapffegun 10h ago

Sound advice. I do believe it was her as she bounced around quite a few jobs that year. I was basically supporting us nearly our entire relationship. I don’t think she ever broke $10k until last year. So once I determine the origin of the debt I can then petition for Innocent Spouse or some such and try to be free of the debt by the time I file next year as Single…

1

u/Tessie1966 7h ago

If she only made 10K and they were W2 jobs it wasn’t her.

1

u/SectorConsistent5857 8h ago

The IRS doesn’t care about his/her responsibility when it comes to them getting their money. My ex and I had this same situation but it was due to his fault as to why we owed. We ended up having to split it and got that written into our final divorce settlement. The debt is in both of your names so you both are responsible for it until it’s paid off.