Dear Moneyist,

I knew my husband of 5 years was poor at managing finances before we got married. The fact that he made $85,000 a year, and had little retirement and no savings clued me in. But he’s so much worse than I expected. He generally seems to have little concern for saving money, which is generally left up to me to manage. I watch our finances like a hawk.

But now I’m at a complete loss. We got a letter from the Internal Revenue Service that our tax refund ($3,000) was being held because the IRS never received his income-tax return for 2014 (the year before we got married). He admits he “forgot” to file.

The Moneyist: I’m 41. My fiancé is 61. I’m worth $1.3M. He’s worth $250K. He won’t marry if I insist on a prenup. How can I protect my assets?

The IRS told him to file by 10/15 and they would figure it out from there. I just happened to come across the tax return he filed. He now owes almost $12,000 in federal income tax for that year.

I make a significant amount more than he does, and I have never owed that much money, so I find that hard to believe. He no longer works for the same company, but says he was able to get his W2. He said he would file taxes himself instead of getting our tax professional to help him.

What are my options for protecting myself from his future money mistakes? We have filed taxes jointly since 2016, but should I stop that? Fortunately, our house is in my name only, but I don’t want to be on the hook for whatever else he may do or money he owes that I’m unaware of.

Thanks for any help you can provide.

Joint Filer

Dear Filer,

There are five problems here. 1. He didn’t pay his taxes. 2. You and he are filing a joint return and are both responsible for making the payments. 3. He didn’t tell you that he didn’t pay his taxes. 4. He does not seem quite humble enough to accept help, and is blustering on without the aid of a tax professional. He got himself into this mess. Learning not to be so self-reliant gives him a better chance of getting himself out of it. 5. You will lose tax breaks as a married couple if you file separately.

So where do you go from here? Make sure you see all his paperwork from now on. “Filing separately is an option and should be considered,” says Robert Seltzer, a certified public accountant with Seltzer Business Management in Los Angeles, Calif. “However, that usually ends up being a more expensive option than the normal joint-filing option that is regularly taken by most married couples. Filing separately will protect your refund from being taken by the IRS in future years.”

“However, before I make that decision, I recommend that you run a credit report on your husband,” he adds. “Obviously, this old tax problem was not disclosed and was a huge shock. You should make sure that there are no additional surprises in your future. If your husband refuses to cooperate, I would take that as a huge red flag. Honesty and transparency are critical to a successful marriage. If my partner refused to be honest with me, I would be looking for a divorce attorney.”

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Tax Court Memorandum decision TCM 2017-144 gives insight on how the U.S. Tax Courts deal with joint filers when one party does not disclose financial problems to the other party. The husband in the case surprised his wife with a request to make a $53,000 payment. According to this record of the case, “When she made the payment she did not inquire about the amount or source of the outstanding liabilities or whether they owed any additional tax.” And that was her second mistake.

Before delivering its ruling, the tax court asked for the following information as part of a 7-part fact-finding mission: “1. Marital status; 2. Economic hardship if relief is not granted; 3. Knowledge or reason to know that the tax liability would not be paid; 4. Legal obligation to pay the outstanding income tax liability; 5. Receipt of a significant benefit from the unpaid income tax liability; 6. Compliance with income tax laws; and 7. Mental and physical health.”

The wife in question was denied relief because she knew her husband had poor credit and was in debt, and she was aware that at least some of his taxes had not been paid. The judge in the case wrote: “The fact that she did not know the details of those outstanding liabilities is unfortunate, but for the purpose of this inquiry, it is immaterial … The fact that she lacked actual knowledge does not release her from the tax liabilities.” Her indebted husband, by the way, was a bankruptcy attorney.

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You can email The Moneyist with any financial and ethical questions related to coronavirus at [email protected]

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