North Carolina Divorce Lawyers Blog

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North Carolina spouses who file federal taxes jointly are typically liable for the taxes that are due when they file. This may create issues and complications in a number of scenarios, but there is an exception to this rule if one spouse seeks to be relieved from liability.

Requesting equitable relief under the Internal Revenue Code can be challenging because taxpayers must meet specific conditions to be eligible.

LaRosa v. Commissioner of Internal Revenue

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For spouses and ex-spouses facing economic hardship and seeking equitable relief from joint and several tax liability, filing a request for relief under federal law may be an option. The Internal Revenue Code (I.R.C.) provides an exception to the usual rule that spouses are liable for each other’s tax debt and liabilities, but filers must provide convincing evidence that they are facing an economic hardship if they choose that route for relief.

Thomas v. Commissioner of Internal Revenue

In the case of Thomas v. Commissioner of Internal Revenue, Thomas requested relief from underpayments for three years of tax returns based on her assertion that she was facing an economic hardship. Thomas sought liability relief for tax underpayments discovered by the Internal Revenue Service (IRS) for tax years 2012 through 2014, but Commissioner denied the request. When the issue went before the United States Tax Court, the Court denied Thomas’ request for equitable relief based on economic hardship under Internal Revenue Code Section 6015(f) because she had significant assets and did not prove hardship based on her income.

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Which filing status is the best option for you on your federal income tax return this year? More than one may apply, such as deciding with your spouse whether to file jointly or separately, but if you plan on filing as head of household, you must be sure you meet the requirements. Continue reading →

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Members of some religious groups can submit a request to be exempt from the Social Security tax, but this choice may limit the tax credits you can claim on your federal return. For example, in order to claim a child tax credit, your child must have a Social Security number. A child who has an individual taxpayer identification number (ITIN) will not qualify. Continue reading →

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When spouses in North Carolina divorce, retirement funds and pension benefits are among the many assets that may be divided between the parties. If you were awarded a portion of your ex-spouse’s pension benefits, the question of when you can receive your payments often has a complicated answer. Often a Qualified Domestic Relations Order (QDRO) will be required to divide retirement benefits, and the standards for QDROs are set by a federal law known as ERISA, or the Employee Retirement Income Security Act. Continue reading →

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Equitable distribution in North Carolina can involve numerous types of marital property and hybrid property, including real estate, bank accounts, investments, vehicles, and personal property like jewelry. Retirement accounts are also a common asset that courts are asked to divide in divorces, but distributing certain retirement plans comes with complex legal requirements. Continue reading →

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Bankruptcy can complicate family law proceedings, especially when trying to determine what assets will be distributed. Normally, bankruptcy can be used to shield certain properties from being included in divorce proceedings. However, certain types of assets will not be excluded because of one spouse declaring bankruptcy.

If your former partner declares bankruptcy during divorce proceedings, will that preclude you from being able to recover an interest in their pension benefits? Continue reading →

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The financial impact of a divorce is often one of the longest-lasting challenges that families will face. Divorces can be expensive, even without the changes in household income and bills. This is especially true for divorced couples with children. The way divorced parents approach filing their taxes each year is another financial consideration they must keep in mind. Continue reading →

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MCMURRAY V. MCMURRAY, 2023-NCCOA-______ (2023) (unpublished)

As a new generation of divorcees begin to reach retirement age since the enactment of ERISA in 1974, we will begin to see cases were a party needs a Qualified Domestic Relations Order (QDRO) to receive a retirement benefit, but somewhere in the divorce process the QDRO was never entered. Below is one such case. Continue reading →

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WELCH V. WELCH, 2023-NCCOA-______ (2023) 

  1. Facts: Plaintiff and Defendant married in 1981. In 2007, the parties initiated divorce proceedings, including filing for equitable distribution (ED). In 2008, the parties entered into a consent judgment wherein marital property was distributed. One such item was an IRA at Charles Schwab. Pursuant to the parties’ consent judgment, each party was supposed to receive half of this IRA. This never happened, and eleven years had passed by the time Defendant realized it. After exhausting remedies under contempt and the rules of civil procedure due to being time-barred by the statute of limitations, Defendant moved for the entry of a domestic relations order (DRO) under the ED statute. This too was denied by the trial court, citing the ten-year statute of limitations. Defendant appealed. 

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