Key Takeaways
- Joint tax debt from marriage is usually treated as a marital liability and is distributed like any other debt.
- The IRS can collect the full amount from either spouse, even if the divorce decree says that one spouse is responsible.
- Massachusetts courts consider income, fault, and benefit when assigning responsibility, and will often split joint debt 50 to 70% in long-term marriages.
- Filing for innocent spouse relief or using indemnity clauses can help protect you from tax-related fallout.
- Post-divorce filing status and dependency claims affect future taxes, including audit risk.
- Filing an Offer in Compromise with the IRS and the Massachusetts DOR can cut debt by 30 to 70% if you’re eligible.
Tax debt in a Massachusetts divorce is unpaid federal or state taxes from joint returns filed during the marriage, including any associated penalties and interest.
Divorce-related tax debt isn’t the same as individual tax liabilities incurred before the marriage. Those are usually seen as separate debts, and the spouse who incurred them is responsible for paying them.
Under Massachusetts General Laws Chapter 208 Section 34, the Probate and Family Court treats tax debt as a marital liability during equitable distribution. That means both spouses could be responsible for repaying the debt (often between 50% and 70% in long-term marriages), depending on things like earning capacity or who benefited most from the unreported income.
However, even if the court assigns one spouse full responsibility for the debt, the IRS can still go after either party for the total amount under the principle of joint and several liability.
Divorce decrees don’t override federal collection rights. To protect yourself, you should consider indemnity clauses in your divorce agreement. These clauses let you seek reimbursement from your ex-spouse if the IRS decides that you owe debts they were supposed to pay. If you’re facing tax issues in your Massachusetts divorce, get legal help early.
Contact our team for Worcester divorce tax guidance.
How Are Joint Tax Returns Handled in Massachusetts Divorces?
Joint tax returns in Massachusetts divorces create joint and several liability, which means the IRS can collect the full amount from either spouse, even if one isn’t technically at fault.
Even if a divorce decree pins the debt on one person, the IRS can still go after the other for the full balance. Let’s say one spouse underreported $15,000 in income during a marriage. The divorce decree accounts for that and says that the spouse in question is on the hook for repayment. However, they don’t uphold the responsibility. In that case, both may be held responsible, even if only one benefited.
Massachusetts courts often issue reimbursement orders so one spouse can recover what they pay if the other was responsible.
Avoid signing joint returns during separation. Filing separately can protect you from new liabilities while you’re resolving the divorce.
Learn more about property and debt division in Massachusetts.
What Filing Status Options Exist Post-Divorce?
Post-divorce, your filing status shifts to “single” or “head of household,” depending on child custody.
Filing status changes can raise your tax bill by 10 to 15% if you’re the higher earner. To help reduce that, you can use different credits (the Child Tax Credit is a good example). However, it’s important to decide early on who gets to claim any child(ren) to avoid complications that might trigger an audit (like both of you filing head of household).
What Strategies Exist for Innocent Spouse Relief in Tax Debt Cases?
For innocent spouse relief in tax debt cases, if you didn’t know about errors on a joint return, file IRS Form 8857 and apply separately with the Massachusetts Department of Revenue (DOR).
To qualify, you have to show that you had no knowledge of the issue and didn’t benefit. Relief is granted in 40 to 60% of applications. Processing usually takes 6 to 12 months.
You’ll need strong documentation, like separate bank accounts or tax prep records, to prove you weren’t involved.
Learn more about financial disclosures during Massachusetts divorce.
When Does Equitable Relief Apply Over Innocent Spouse?
Equitable relief applies when you knew some of the tax issue, but fairness still supports relief.
The IRS considers hardship, abuse, and financial control. Approval rates are lower, around 20 to 40%.
If you shared a joint account but didn’t have access, you may still qualify.
How to Gather Evidence for Relief Applications
To support your claim, submit 5 to 10 of the following documents:
- Affidavits from accountants or family
- Separate bank statements
- Texts or emails showing financial control
- Tax prep files proving lack of knowledge
File within 2 to 3 years of IRS notification. An experienced attorney can help make sure that your case meets federal and state requirements.
How Do Offers in Compromise Work for Tax Debt in Divorces?
Offers in Compromise (OIC) let you settle tax debt for less if you can’t pay in full.
The IRS and Massachusetts DOR approve 30 to 70% of OICs when you prove financial hardship or doubt the agency could collect.
You can pay a lump sum or set up monthly installments. Divorce-related income changes can also make your case stronger.
If the debt is joint, both spouses have to agree unless you file separate OICs. Note that you should always work with an experienced tax advisor.
Explore high-asset divorce considerations in Massachusetts.
What MA-Specific Rules Apply to State Tax Debt?
The Massachusetts DOR generally follows IRS standards, but with its own processes, and you must appeal within 60 to 120 days of a notice.
Note that, occasionally, DOR offers amnesty programs that reduce penalties by 20–50%. However, they’re narrow windows and don’t last long. For instance, the most recent ran from November 1, 2024, through December 30, 2024.
Liability depends on residency. If you earned income in MA, you likely owe state taxes, even after moving.
What Impact Does Tax Debt Have on Property Division?
Tax debt affects asset division during divorce in multiple ways, including offsetting shared debts.
For example, a $10,000 refund might be used to offset a shared $10,000 debt.
Massachusetts courts follow Section 1041, which allows tax-free property transfers in divorce. But this rule doesn’t eliminate debt. It just prevents capital gains taxes.
In high-debt cases, courts might assign a tax lien to one spouse, with 10 to 30% of the asset value offset elsewhere.
Read more about alimony adjustments in Massachusetts.
How Does Tax Debt Affect Alimony and Child Support?
Tax debt directly affects alimony but not child support.
Since the 2018 federal tax reform, alimony is no longer tax-deductible for the payer or taxable to the recipient. This bumps up the net cost by 15 to 25%.
Child support isn’t tax-deductible, but refunds can be intercepted to pay arrears. If tax debt affects your income, you may qualify for support modifications.
Explore child support tax implications in Massachusetts.
What Common Pitfalls Exist When Managing Tax Debt in Divorces?
Some of the more common issues when managing tax debt in divorce include ignoring differences between state and federal processes and hidden debts.
Blurring the lines between federal and state requirements can result in duplicate liabilities. Hidden debts discovered post-divorce are another major issue. Divorces raise your audit risk by 5 to 10%, especially if you file inconsistent returns. DIY filings without professional help often make matters worse.
Proactive strategies include:
- Requesting IRS account transcripts
- Filing for Voluntary Compliance Programs (VCP)
- Hiring a CPA or tax lawyer for review
Learn more about common Massachusetts divorce errors.
Frequently Asked Questions
Can IRS collect tax debt from my separate assets after Massachusetts divorce?
Yes. For joint debts, the IRS can seize individual assets unless you receive relief or pay your share.
What if my ex hid tax debt during our Massachusetts marriage?
You can seek innocent spouse or equitable relief, but you’ll need evidence.
Does filing separately during separation protect against spouse’s tax debt?
Yes. Filing separately avoids joint liability, though it may increase your tax bill.
How long after divorce can IRS pursue me for joint tax debt?
The IRS has up to 10 years from the assessment date to collect.
Can Massachusetts courts force sale of assets to pay tax debt?
Yes. Courts can order asset sales or liens to satisfy debts, especially in high-asset divorces.
Michelle Murray has devoted her practice exclusively to family law matters, focusing her efforts on assisting clients through divorce, custody, property division, child support, spousal support, and visitation issues throughout Worcester County.