When Divorce Meets the IRS: What Austin Couples Should Know About Divorce and Taxes
In Episode 28 of Cases & Cocktails, Bryan and Janice Eggleston of The Eggleston Law Firm in Austin sit down with CPA Michael Boatright, managing principal at Boatright CPA, to unpack the hidden tax traps that often follow divorce—and how to avoid problems with divorce and taxes.
This week’s drink: a Bourbon Coffee Flip made with Buffalo Trace and cold brew—strong enough to handle tax talk, smooth enough to sip while learning something new.
The IRS Doesn’t Care What Your Divorce Decree Says
One of the most shocking truths Boatright shares? If you and your ex filed joint tax returns, you are both fully liable for the entire tax debt.
This is called “joint and several liability.” That means:
- The IRS can collect the full balance from either party, regardless of what your divorce decree says.
- If your ex agreed to take on the tax debt in court, that agreement is not enforceable against the IRS.
- Your only recourse is to sue your ex in state court after the IRS comes for you.
Innocent Spouse Relief: Rare, but Possible Solution to Divorce and Taxes
What if your spouse committed tax fraud or underreported income without your knowledge? The IRS offers something called Innocent Spouse Relief—but it’s very difficult to qualify for.
Michael explains the requirements:
- You must prove you didn’t know and had no reason to know about the misconduct.
- You must also show that you did not benefit from the underreported income.
- The burden of proof is on you, and it’s high.
His advice: don’t assume you’re protected just because you weren’t involved. If your name is on the return, you may be held responsible in this divorce and taxes trap.
Feed Buckets and Filing Chaos: Why Records Matter
In one of the episode’s more vivid moments, Michael recalls clients dropping off taxes in literal feed buckets and boot boxes. While Boatright CPA is now fully digital, the lesson remains:
Messy records can wreck your divorce case.
Especially when:
- Taxes haven’t been filed in years
- One spouse ran a cash-heavy business
- Financial documentation is incomplete or disorganized
This can affect everything from property division to child support to spousal maintenance calculations.
Post-Divorce Financial Survival in Austin
For recently divorced individuals—especially those who weren’t the “financial partner” during the marriage—Michael recommends:
- Building a professional team: CPA, financial advisor, attorney
- Creating a forward-looking tax plan
- Avoiding financial advice from unverified social media sources
- Getting a second opinion before filing solo
“It doesn’t matter if you make forty thousand or four million,” Michael says. “The complexity is still there—and the risks don’t disappear just because the marriage ends.”
Why This Episode Matters for Austin Families
This episode delivers valuable information that most people only learn the hard way. Whether you’re currently divorcing in Travis County, planning a separation, or reviewing your tax liability post-divorce, this conversation with Michael Boatright is essential listening.
As one of the top CPA firms serving Austin, Round Rock, Cedar Park, and surrounding areas, Boatright CPA brings decades of real-world insight into the overlap of family law and financial strategy.
Contact The Eggleston Law Firm in Austin, TX
If you’re going through a divorce and need legal guidance on how it may impact your taxes, reach out to The Eggleston Law Firm. We work closely with professionals like Michael Boatright to help clients avoid costly mistakes and secure a stronger financial future.
FAQ – Divorce and Taxes in Austin, TX
1. Can my divorce decree protect me from IRS collections?
No. The IRS is not bound by your divorce decree. You are still liable for any joint tax debt.
2. What is innocent spouse relief and how do I qualify?
It’s a special IRS program for spouses unaware of tax fraud—but qualifying is rare and requires substantial proof.
3. What happens if my ex hasn’t filed taxes in years?
This can severely impact divorce outcomes and financial settlements. You’ll need legal and CPA support to untangle the situation.
4. Can the IRS go after me if the taxes were my spouse’s responsibility?
Yes. If you signed the joint return, the IRS can collect the full amount from you.5. When should I talk to a CPA during divorce?
Before you sign anything. Early tax planning can prevent years of financial headaches.
