Question: I have a home and other assets. I recently married and then found out my husband had not filed taxes for 10 years — and owes the IRS $38,000! Is my home, bank account, and assets subject to a lien? Are they at risk? If my husband owes taxes do they come after me, even if he incurred the debt before we got married?
— Debra in Texas
If My Husband Owes Taxes Do They Come After Me?
If my husband owes taxes do they come after me? A reader doesn’t care about her husband’s old flames, just his old bills. Three of the happiest words in the English language are, I love you. Three of the absolute scariest words, Internal Revenue Service.
When you combine them it can get really confusing. Some of the trickiest financial questions I’ve ever heard were from spouses stuck in tax disputes. Tax problems are complicated enough when one person is involved. When it’s two spouses filling jointly it’s the difference between walking a tightrope and walking a tightrope while giving someone a piggyback ride, and don’t get me started on community property estates.
For that you need a read my much longer answer to Deborah on Debt.com and check out our section titled, “If my spouse owes back taxes and I liable?”. This is a good time to remind couples who aren’t yet married, but are planning to sit down together and make a list of your finances. I’m talking the good, I’m talking the bad, and I’m talking the ugly your assets and your debts.
I’ve always said the best way to deal with the IRS is to never get on their radar. If you want advice for how to budget so you don’t get in trouble consult Debt.com before you say I do.
Howard Dvorkin answers…
Even though I’ve been a CPA and financial counselor for more than two decades, I prefer to consult tax experts on questions like these — just to confirm I’m right.
In this instance, my instincts proved correct, says Don Markland, chief revenue officer for the Tax Defense Network. Debt.com partners with Markland’s firm because of its experience and adherence to Debt.com’s Code of Ethics.
The easy answer is yes, Debra is liable. Texas is a community property state, and debt created during the marriage is owed by both spouses.
Of course, when it comes to taxes, nothing is easy. So let’s break it down.
What are community property states?
If you live in one of these states — and there are only nine of them — all the property and debt acquired during a marriage belongs to both spouses. Texas is one such state. (The others are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington, and Wisconsin.)
“Income or assets created during the marriage are subject to collections,” Markland says. “Your income and bank accounts are at risk.”
What about before the marriage?
“Generally, premarital assets are not community property and can be protected,” Markland says. Please note the word generally. That’s because other factors come into play. Here’s just one, Debra: Are you filing jointly or single?
“This will greatly influence your returns,” Markland says.
What to do next
First, you should read the Debt.com report that touches on this very topic. It’s called If My Spouse Owes Back Taxes Am I Liable?
While that report is, in my humble opinion, the best and cleanest explanation I’ve yet seen, it’s still not a pleasurable read. That leads me to warn you…
Because tax issues are complex, and because you live in a community property state, you need to consult an expert. Whenever I tell people this, they usually express fear: How much will this cost me?I tell them: You will indeed pay a fee, but if you consult a reputable expert, it’s almost always less than it would cost you to try it on your own — and always less than the cost of ignoring the problem until it catches up with you.
Concludes Markland: “We’d love to talk to Debra and walk her through this. It can be complicated, but we have experts who handle this all of the time.”
I can vouch for that.
Have a debt question?
Email your question to firstname.lastname@example.org and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.
The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the opinions and/or policies of Debt.com.