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Money issues can complicate any divorce, and few are more stressful than IRS debt or back taxes in a New York divorce. Whether the tax bill stems from joint returns, a business, or past mistakes, understanding how that debt is treated under New York law is essential to protecting yourself.
Generally, if the debt appears on a joint tax return, it’s considered marital debt. However, if each spouse filed separate returns, things get more complex. Courts will look at the circumstances. For example, were the spouses living separately at the time of filing? If so, the debt might be assigned to the individual who filed that return.
Even with a joint return, one spouse may be able to invoke what’s known as the innocent spouse defense. This defense can apply not only in IRS audits but also in divorce proceedings.
Here’s an example:
If a husband runs a business and underreports income or overstates expenses without the wife’s knowledge, she might claim the innocent spouse defense. If she truly had no reason to know about the misreporting and wasn’t involved in the business, the IRS or the court may absolve her of responsibility.
However, that defense weakens if there’s evidence she was aware of the misreporting. For instance, if she handled the books herself. In that case, she likely can’t claim innocence.
When it comes to debt, fairness depends on how and why it was incurred. Just because a debt arose during the marriage doesn’t automatically make it marital. Under New York’s equitable distribution laws (which focus on fairness, not strict equality), courts look closely at the nature of the spending.
So, if one spouse racks up $10,000 in personal luxury purchases, say, designer clothes or jewelry, and keeps those items after the divorce, it would be unfair to make the other spouse pay for that debt.
On the other hand, if one spouse uses a credit card primarily for personal meals or work lunches, that’s also considered an individual expense (& thus not “shareable” in a divorce).
Debts for joint expenses such as utilities, family vacations, or household costs are typically considered marital and divided between spouses, often 50/50. That split can, however, be adjusted based on income differences or other financial considerations.
With years of experience in New York family and matrimonial law, David Bliven, founder of the Law Offices of David Bliven, has guided countless clients through complex divorces involving IRS debt, hidden liabilities, and disputed finances.
A former Family Court prosecutor and AV-rated attorney, Mr. Bliven brings deep knowledge of both tax-related divorce issues and equitable distribution laws. His firm focuses on protecting clients’ financial futures with precision and foresight.
If you’re facing divorce and tax complications, contact David Bliven today to secure the clarity and protection you deserve.
The best approach is full transparency. Both spouses should exchange debt statements and review how and why the debt arose. If both agree it was for joint/marital purposes, a 50/50 split is standard. But every case is unique. If one spouse earns substantially more, or if maintenance and child support are factors, the division might shift to something like 60/40, 70/30, or another ratio that reflects each person’s situation and fairness.
Oftentimes, it’s worthwhile to seek the assistance of a tax professional, especially when the issue extends beyond what a divorce attorney can confidently assess. A tax professional (typically a CPA) can help determine:
Your attorney can coordinate with a tax expert, but for technical tax questions or risk assessment, an accountant’s opinion is invaluable.
If a tax lien is in place, first determine who it targets. Was it filed on a joint return, or against one spouse only? Even then, the lien can still be addressed in your divorce settlement. If the debt is tied primarily to one person’s income, your agreement can include a clause stating that spouse assumes responsibility and indemnifies the other.
That means:
This is a common and important clause in New York divorce agreements. It protects the spouse who shouldn’t be liable for a particular debt. In plain terms, if one spouse promises to handle the tax debt, “hold harmless” means the other spouse won’t bear any financial fallout if the IRS later comes knocking. Any expenses incurred in defending against that debt can be recovered.
With years of experience in New York family and matrimonial law, David Bliven, founder of the Law Offices of David Bliven, has guided countless clients through complex divorces involving IRS debt, hidden liabilities, and disputed finances.
A former Family Court prosecutor and AV-rated attorney, Mr. Bliven brings deep knowledge of both tax-related divorce issues and equitable distribution laws. His firm focuses on protecting clients’ financial futures with precision and foresight.
If you’re facing divorce and tax complications, contact David Bliven today to secure the clarity and protection you deserve.
Whether it makes sense to file taxes jointly or separately depends on your financial picture. Think of your income levels, deductions, child custody, and more. That’s a decision best made with your accountant, who can evaluate which option provides the most benefit or protection.
If you’re being asked to sign an old or amended tax return, proceed with caution. This is not something a divorce attorney should advise on. Why? Because it’s a tax matter. Always consult an accountant before signing anything. You need to know what you’re agreeing to and whether it could expose you to liability down the road.
Most reputable divorce attorneys will be clear about how they don’t give tax advice. Their role is to ensure your settlement agreement protects you legally; the tax professionals handle the IRS specifics.
While a divorce attorney can’t resolve pure tax disputes, they can ensure your divorce judgment or settlement agreement clearly outlines who is responsible for what. If future issues arise, such as a spouse failing to pay an agreed-upon tax debt, your attorney can file for modification or enforcement of the judgment.
The key? Foresight. If your settlement is silent on tax debt, you may be stuck with it later. A clear agreement that allocates responsibility and includes indemnification language is your best protection.
Tax debt doesn’t have to derail your divorce or your peace of mind. With the right mix of legal and financial guidance, you can:
When in doubt, involve both your divorce attorney and a qualified tax professional. Together, they can help you move forward with clarity and confidence.
For more information on back taxes in New York divorce, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (347) 333-4824 | (914) 206-0048 today.
With years of experience in New York family and matrimonial law, David Bliven, founder of the Law Offices of David Bliven, has guided countless clients through complex divorces involving IRS debt, hidden liabilities, and disputed finances.
A former Family Court prosecutor and AV-rated attorney, Mr. Bliven brings deep knowledge of both tax-related divorce issues and equitable distribution laws. His firm focuses on protecting clients’ financial futures with precision and foresight.
If you’re facing divorce and tax complications, contact David Bliven today to secure the clarity and protection you deserve.
