ATTORNEYS AT LAW 1009 W 7TH AVENUE ANCHORAGE, ALASKA 99501 TELEPHONE: (907) 279-4529 FAX: (907) 279-9223
TAX LAW AND DIVORCE: THE INNOCENT SPOUSE
You may learn after your divorce that during the marriage your spouse cheated the IRS. The IRS may come after you for taxes, penalties and interest. It may be possible for you to obtain certain relief as an innocent spouse. You must show that any understatement of taxes owing was caused solely by the other spouses, that you did not know about any under reporting of taxes owing, and that it would be unfair for the IRS to hold you accountable for back taxes. If this situation happens to you, it may be wise to speak with a lawyer and/or CPA to determine your rights as an innocent spouse.
ALIMONY OR PROPERTY DIVISION?
There may be certain advantages for a spouse who agrees to pay or receive alimony rather than property in a division of the marital estate. Alimony awards normally are tax deductible to the spouse who pays, and must be declared as income to the receiving spouse. Property division normally does not have such a consequence. Moreover, alimony awards generally are not dischargeable in bankruptcy, while a spouse may be able to discharge an unpaid property settlement amount.
OBTAINING CREDIT
Credit may be very difficult to obtain after a divorce. Sometime prior to the divorce both husband and wife should check into their status of credit. Just because both husband and wife use an account does not mean that each of you have established credit ratings or credit histories. It is imperative to establish your own credit history before the divorce. Call the Credit Bureau of Alaska, Inc., 3003 Minnesota Drive, Anchorage, Alaska, Telephone 279-5689 and order a copy of your own credit history and their brochure No. E33. If there have been credit problems in the past, there are ways to reestablish credit, and you should check into them.
Credit card debts incurred while you were married are usually the responsibility of both parties. This is especially true in the case of necessities and where both parties have signed a charge account or credit card application. Remember, just because a court order requires your ex-spouse to pay their own debts or yours, you are not absolved of your own responsibility to the creditor, and you can wind up paying part or all of those bills. It is possible for one party to run up credit card debts, either before or after the divorce, and then try to stick the other person with the bill and sometimes even file bankruptcy. This happens because both parties have signed the credit card application saying that they agree to pay for any charges on the account up to the credit card limit. What needs to be done is that the following letter needs to be sent to each of the credit card companies to cancel the joint credit cards. Remember, however, that once this is done, it will probably be difficult to get any other credit cards, and you should at least find out from each of the credit card companies what their policy is regarding credit card holders who are getting a divorce.
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©1998 By Pradell and Associates. This newsletter is not intended to provide legal or Tax advice. Those seeking such advise should consult with a lawyer or tax advisor.