Picture a cozy household of three -- Brad Pitt, Angelina Jolie and the friendly tax man. Fact is, whether Brad, Angelina, Jennifer, Bristol, Levi, Snooki, or anyone else is hooking up, breaking up, or something in between, the odds and ends of their relationships are grist for the Internal Revenue Service mill.
Consider, for example, the splashy wedding of reality TV personality Kim Kardashian (her second marriage) to basketball player Kris Humphries (his first). They wed on August 20, 2011. Seventy two days later, Kim filed for divorce. Kris countered by seeking an annulment on the grounds of fraud (the case is still pending).
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 -- like 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 -- for example, 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 an IRS ruling, if an annulment is retroactive, the couple was never married. As a result, they had no right to file joint returns (Revenue Ruling 76-255).
An example: John and Mary married in 2011, 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 2011. 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 dinged 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 (for most individuals) 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 have paid reduced taxes as single persons.
Before I wade into more of the legal stuff, I want to be fair to Kim and Kris. They aren't the only celebrity couple whose marriage became notorious because of its brevity. The long list of short-lived couplings of celebs includes: Oscar winner Ernest Borgnine and Broadway musical star Ethel Merman (32 days); basketball bad boy Dennis Rodman and Baywatch babe Carmen Electra (nine days); and Britney Spears and Jason Alexander (55 hours).
In my experience as a tax lawyer, couples who quickly sever their ties frequently find out the expensive way that the IRS is intransigent. It insists that a couple's marital status as of Dec. 31 determines their filing status for the entire year. So the agency considers Kim and Kris married for the entire year even though they may be living apart, absent a final divorce (or legal separation, an option available in Kim's state of California, but not in all states) or an annulment. It permits them to file a joint return (though its not likely that their lawyers would advise them to do that) or separate returns. It forbids them from filing as single persons.
What if their divorce (or legal separation) becomes final one minute before New Year's Eve? Expect a consistent IRS to decree that they are single for the entire year, which means they can't file jointly and must file as single persons.
What if Kris prevails and the wedding is annulled? Then the IRS will say Kim and Kris were never married and couldn't claim the filing status of married persons. They must submit amended returns as unmarried filers.
Julian Block is an attorney and author based in Larchmont, N.Y. He has been cited as: "a leading tax professional" (New York Times); "an accomplished writer on taxes" (Wall Street Journal); and "an authority on tax planning" (Financial Planning Magazine). Information about his books is at julianblocktaxexpert.com.
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