On top work and the decision to move to Florida, my time has been occupied dealing with a little IRS issue. You know, even the act of writing, "IRS" makes my bottom pucker just a bit. They scare me. Anyway...
As a condition of his divorce settlement, Dallas was to turn over half of his stock options and half of his 401K to his ex wife, which was pretty standard as far as the division of assets usually goes. All marital bills were paid out of the proceeds and the remainder was split. Dallas took his half, put his chopper on a boat and flew home to New Zealand. He didn't expect to return.
But he did and recently, we were alerted to the fact that we might have a wee tax problem (again, involuntary constriction of said nether region). It seems that Dallas's divorce decree was missing a QDRO or qualified domestic relations order.
What's that, you ask?
Basically, it's an legal order which in this case, would have acknowledged that the retirement honeypot was raided early and split between the parties. It would have directed the retirement company to send one disbursement cheque to Dallas and one to his ex. Unfortunately, with no QDRO only one cheque was issued.
In Dallas's name.
And even though he did exactly what he was supposed to and gave the proceeds to his ex, the IRS doesn't give a fig about the details of a divorce decree. All they recognize are the tax documents reported to them. Blah, blah, blah. What this meant is that ALL of the taxes and ALL of the penalties became his (our) responsibility.
YIKES.
And even this would have been manageable except that the full value of the retirement plan and the stock options put Dallas into a tax bracket reserved for wealthy people and trust fund babies. I kept doing the calculations on the amended return over and over because I just couldn't believe the "tax owed" number that was popping up on my calculator.
And when you add a couple of years of penalties and interest....
Yeah. Fugly.
$25,000 worth of fugly.
Gulp.
3 comments:
Well shit, that just sucks! Can't the ex prove she paid taxes on her half? Or something?
Yeah, IRS scares me too. Try self-employment. You know all that money you pay into Social Security and Medicare? Yeah, well, as self-employeed, you have no employeer paying the other half of that - we have to pay ALL of it. Between it and taxes this year, I'm of the opinion that perhaps we should make the privilage to vote to only go to those who pay taxes - not get a 100% refund. At the rate of something like 1 vote for every $1000 you pay in taxes. I'll take those 37+ votes we'd get and do something really useful with them. Like change taxes to the use base system, instead of this horrific system we have now.
Holy soft objects passing from a dog's rectum! I have finally found it- and it is a woman!!! No wonder I was confused...I thought that the person who was the worst ex would have been a MAN. But no, she's a woman!!! I'm so sorry. The jerk minoid!!!
As my 12-year-old would say .... nasty. Hang in there! <3
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