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Divorce Versus Annulment: It Makes a Big Difference on Your Tax Return

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Feb 4th 2015
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Imagine a cozy household of three: just Brad Pitt, Angelina Jolie, and the friendly tax man. Fact is, whether Brad, Angelina, Jennifer, or anyone else is hooking up, breaking up, or something in between, the odds and ends of their relationships are grist for the IRS mill.

Consider, for example, the splashy wedding of reality star Kim Kardashian to former New Jersey Nets basketball player Kris Humphries. They wed on August 20, 2011. Seventy-two days later, Kim filed for divorce. Kris countered by seeking an annulment.

The dif­ference between a divorce and an annulment isn’t a difference without a distinction. The courts grant a divorce to mark the end of a marriage that was valid when entered into, whereas they grant an annulment to end a marriage that was void or voidable. A marriage is void when it legally couldn’t have taken place, such as when one of the parties was under the age of consent at the time of the marriage or already married. Voidable is legalese for incapable of consenting, as when one of the parties was intoxicated or the victim of behavior like duress, coercion, or force.

To a couple interested only in the fastest way to untie the knot, the question may seem to be an unimportant technicality. Those watchful souls at the IRS, however, think that there’s an important difference when Form 1040 time rolls around. According to Revenue Ruling 76-255, if an annulment is retroactive, the couple was never married. Result: they had no right to file joint returns.

An example: John and Mary married in 2012, filed jointly for that year, and had their marriage annulled after the filing deadline. Because their marriage was declared null and void from its very inception by the annulment decree, they’re considered to be unmarried at the end of 2012. Consequently, as an unmarried couple, they were ineligible to file jointly. The IRS requires John and Mary to “undo” their joint return by the filing of amended returns as unmarried filers. That can mean they get dunned for additional taxes.

Normally, the IRS doesn’t allow people who file joint returns to change their filing status and switch to separate returns once the filing deadline of April 15 has passed. Revenue Ruling 76-255 deals with the rare circumstance in which joint filers can switch to separate returns. This ruling involved only a one-year marriage. Nevertheless, the theory would presumably apply regardless of the marriage's length. On the plus side, refunds may be available to couples whose marriages were annulled and who would’ve paid reduced taxes as single persons.

About the author:

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

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