Should I call the IRS about my ex trying to use the house as his exemption?

April 9, 2007 8:37 AM

My mortgage company called me and told me that my ex-husband requested tax info regarding a mortgage on my house from 2002. Seems that my ex-husband is finally getting around to filing his tax returns for 2002-2005 and wants to use the mortgage interest and real estate taxes that I paid on his return. We separated in 2001 and divorced finally in 2003. If I call the IRS, do you think this would jeopardize me in any way?

After we separated in 2001, I filed as head of household in 2002. I claimed the mortgage interest and real estate tax that I paid from a checking account that was in my name only. The house and the mortgage were in both of our names at the time and I have lived in the house since June 2002 - when my ex, who squatted in the house from the time we separated in 11/01 through 5/02, was removed by a court order. We never lived in the house together. My ex was ordered by the court to reimburse me for his time in the house as well as for the utilities that he used, and heating for the months that he was in the house. The divorce was delayed until June 2003 as my ex was waiting for the appreciation on the house to increase before signing anything. In the end, I paid him $25,000 cash to buy him out and I refinanced the house and changed the deed to have everything in my name only. My accountant advised me to sit and wait for the IRS to catch my ex. If I call the IRS and report my ex's intentions, I am afraid that the IRS will now start looking at my returns (I did everything by the book and am not really worried, but don't want any red flags next to my name). Any advice?

posted by anonymous to work & money (12 comments total)

My accountant advised me to sit and wait for the IRS to catch my ex.

That's exactly what you should do.

He's playing a dangerous game by deducting expenses that were paid by someone else, and it will (not might, will) eventually catch up to him. Mortgage interest payments are filed with the IRS on Form 1098, and that interest is attached solely to your SSN, not his. His attempt to claim those expenses at his will likely trigger a flag at the IRS for a computer audit (automatically generated tax bill), if not something more substantial.

Nothing for you to do here.
posted by psmealey at 8:55 AM on April 9, 2007 [1 favorite]

Do what your accountant said. That's why you pay him. But if you want the opinion of a random stranger on the internet, I'd say:

• If you don't report your ex, he might get audited, you might get audited, but you will be fine in the end.
• If you do report your ex, he will probably get audited, you are more likely to get audited, but you will be fine in the end

So if you are seeking to avoid a hassle for yourself, don't report this. If you are seeking to cause a hassle for your ex, do report it. Of course there are other moral/ethical considerations in reporting but your question seems to be asking mainly about the potential for it to cause trouble for you.
posted by grouse at 8:56 AM on April 9, 2007

As long as you have the documentation that you indeed claimed and paid the taxes even if the IRS came knocking you'd be in the clear.
Dependant on your relationship with your ex I'd either let it go until (if) he gets caught, or report it.
If you did report it I would venture a guess that seeing as he is just now filing for 2002 and you have been up-to-date he would bear the brunt of the scrutiny. And really, if he knows what he is doing (I suppose it is possible he is confused and believes he can legitimately make this claim as he was on the mortgage at the time.), and from his past behavior I'd probably report him before things get too much more confusing with whatever else he is doing behind the scenes tax wise that may have some bearing on you.
Have your ducks in a row and make the call.
posted by edgeways at 8:58 AM on April 9, 2007

Maybe I'm reading this wrong, but your ex sounds sort of scary. Besides the potential legal hassles, I'd be worried that he might seek some sort of retribution if you get him in trouble.
posted by M.C. Lo-Carb! at 9:34 AM on April 9, 2007

Why wouldn't you warn your ex that he is likely to get in trouble doing this?
posted by ill3 at 9:45 AM on April 9, 2007

The IRS has a program where you could report him and get a portion of the taxes they collect from him (for example, link here). That being said, it is only about 10% of the amount which sounds small in this case. I think doing so would be more of a "screw you" than something that would benefit you financially. I would just let the IRS figure it out.
posted by procrastination at 9:47 AM on April 9, 2007

Technically he was on the mortgage, and if you were still married, then technically he has just as much right to deduct a portion of the interest as you did. I am not an IRS agent, but this could come back to haunt you for deducting the whole amount. Although the head of household thing may be your saviour.
posted by Gungho at 11:11 AM on April 9, 2007

Ask Taxgirl
posted by Blazecock Pileon at 11:20 AM on April 9, 2007

IANATE (tax expert) but I have been a volunteer for the IRS's VITA Program for several years now. It seems you've already spoken to a qualified accountant, based on your post, and I'd say his advice is sound. I'm going to raise a few points, but more so for posterity for anyone who finds this thread in the future.

You filed head of household in 2002: For this, I'm assuming you're talking about filing in calendar year 2002 for fiscal year 2001. This is fine as long as you and your ex did not live together after June 30, 2001. Also, this assumes you have at least one dependent. If both those conditions are true, you are fine - you're technically filing as an Abandoned Spouse. Otherwise, your status would be Married Filing Separately. If you think an error was made and you filed under the wrong status, you can still file a 1040X which an amended return for that year and pay any difference in taxes that might apply.

Claiming mortgage interest and real estate taxes on your Schedule A: Up until such time as the ex's name was officially off the deed, he could still technically take those deductions. Think of it this way: if you were still together and Filing Jointly, regardless of who paid the bills the deduction would be on your Joint Return. In an amicable split, separated spouses can decide amongst them who will be taking the deduction and in what percentage. In this case, you have something very important going for you - you claimed it first. Your name on the mortgage, your name on the tax bill and your sole name on the checking account all point to this being your deduction. As the subsequent filer, it will be his return that triggers the audit (and it will), and the burden of proof will be on him to prove that the deduction is rightfully his. Based on your post, he will not be able to produce documentation to that effect.

In short, just save all your paperwork and wait for the IRS's computers to do the dirty work.
posted by Freon at 11:47 AM on April 9, 2007

I agree with Gungho - Unless your ex filed a "quit claim" on ownership of the house and you re-financed the mortgage to be in your name only, he may have a right to claim the mortgage interest paid in 2002.
posted by indigo4963 at 12:05 PM on April 9, 2007

If your accountant says "shut up," follow his advice. It might be that you could end up in hot water, or at least under scrutiny, if you report him.

Vengeance may be sweet but not when it backfires. The last thing you want is for the IRS to come around and start questioning your old returns.

Using the IRS to get back at your ex is like poking a dragon in the eye with a stick, in the hopes that it'll wake up and fry the guy next to you. Sure, it might work, and if it did, man would it be cool to watch ... but even if it does work, you still have an angry dragon flying around in your neighborhood, looking for other people to fry, and that's just bad for business.

Don't go poking big angry things with sticks; the IRS is one big, angry thing.
posted by Kadin2048 at 12:33 PM on April 9, 2007

Our divorce agreement states that I get the tax deduction for our son. My ex- claimed him one year anyway, and did not mention this to me. We both got letters from the IRS saying, basically, "what's the deal?" He had to re-file the taxes and pay up. This is what will almost certainly happen to your ex.
posted by theora55 at 2:19 PM on April 9, 2007