Divorce versus annulment: it makes a big difference on your tax return

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Imagine a cozy household of three: just Brad Pitt, Angelina Jolie and the friendly tax man. The thing is, whether Brad, Angelina, Jennifer, or anyone else hooks up, breaks up, or something in between, the odds and ends of their relationships are grist for the IRS mill. .

Consider, for example, reality TV star Kim Kardashian’s splashy marriage to former New Jersey Nets basketball player Kris Humphries. They married on August 20, 2011. Seventy-two days later, Kim filed for divorce. Kris countered by asking for a cancellation.

The difference between a divorced And one cancelation is not a difference without a distinction. Courts grant a divorce to mark the end of a marriage that was valid at the time of its conclusion, whereas they grant an annulment to end a marriage that is void or voidable. A marriage is void when it could not legally have taken place, for example when one of the parties had not reached the age of consent at the time of the marriage or was already married. cancellable is legalese for unable to consent, such as when one of the parties was intoxicated or the victim of behavior such as duress, coercion, or force.

For a couple interested only in the quickest way to untie the knot, the question may seem like an unimportant technicality. However, these watchful souls at the IRS believe there is a significant difference when Form 1040 time passes. According to Tax Ruling 76-255, if an annulment is retroactive, the couple was never married. Result: they were not allowed to file joint statements.

An example: John and Mary got married in 2012, filed a joint application for that year, and had their marriage annulled after the filing deadline. Because their marriage was declared null and void from its inception by the Annulment Decree, they are considered single at the end of 2012. Therefore, as an unmarried couple, they were not eligible to file jointly. The IRS requires John and Mary to “cancel” their joint return by filing amended returns as unmarried filers. This can mean they get snubbed for additional taxes.

Normally, the IRS does not allow people filing joint returns to change their filing status to separate returns after the April 15 filing deadline has passed. Tax Ruling 76-255 addresses the rare circumstance in which joint filers can switch to separate filings. This decision only concerned a one-year marriage. Nevertheless, the theory would presumably apply regardless of the length of the marriage. On the positive side, refunds may be available for couples whose marriages have been annulled and who would have paid reduced taxes as single people.

About the Author:

Julian Block writes and practices law in Larchmont, New York, and was previously with the IRS as a special agent (criminal investigator) and attorney. For more on this topic, see “Julian Block’s Year Round Tax Strategies”, available at julianblocktaxexpert.com.

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