Ah, tax season. Time to put together a folder of all of your important tax documents. If you’ve chosen to pay a tax preparer, you’ll need to drop off those documents, but you’re not off the hook yet. Someone will need to be the go-to person to speak with the tax preparer if he has a question (and he may have several).
If you choose to do the taxes yourself with online tax tools, you’ll likely face hours in front of the computer with a tax software program trying to enter all of your information correctly to avoid an audit.
The question is, who handles the tax responsibility in your relationship?
The “Finance” Guru Handles It
My guess is that in most relationships, the person who handles the finances every month is also the person who handles filing taxes. (This is the way it works in my relationship.)
This scenario is fine as long as both parties are agreeable and financially responsible. Unfortunately, that is not always the case.
Potential Problems with the Finance Guru Handling Taxes Solo
One potential problem is that the other spouse is uncooperative. For instance, Ron and Beth have been married for 12 years. Ron owns his own business, and Beth works full-time as an accountant.
Ron isn’t good about keeping his receipts for the business. He knows not being responsible this way causes Beth more headaches when filing the taxes, but he doesn’t change. For the last several years, they’ve needed to file for an extension because it took Beth so long to reconcile the books without Ron’s cooperation and his lack of organization.
In this situation, Ron is taking advantage of Beth because he knows the job of filing taxes will never fall on his shoulders.
Another problem is even more serious—fraud. If one person handles all of the money and files the taxes, the other person may simply sign the return without closely examining it. If the one filing the taxes is fraudulently doing so, they may both be on the hook should they get caught, even though the other spouse is innocent.
According to Neal Frankle at Wealth Pilgrim, “If you file a joint tax return, you do benefit by paying lower taxes, and that’s great. But sometimes one spouse goes too far in trying to reduce the tax liability. When they break the law, you’ve got a problem. Why? If you file a joint return and the information is false or wrong, the IRS can go after either of you because you both signed the return.”
A Safer Way—Handle the Burden Together
A better, safer way, perhaps, is to do the tax return together. My husband and I do a version of this. I gather the necessary material (with his help for his W-2s, etc.), he scans the documents for electronic submission to the accountant, and then when we sign the forms, we go over it together. I am usually the one to talk to the accountant, so I let him know what she said. This way, he’s still involved in the process.
Letting your spouse handle the taxes completely is the easy way, but you owe it to yourself and your spouse to take a more active role.
My Questions for You
How do you and your spouse handle filing taxes? Does the way you handle it work for both of you?