cm wrote:

- quote -

If your estimated tax payments were made along with a joint
declaration, i.e. both names and social security numbers were
on the 1040-est coupons, then the irs indeed is correct. And
I'm guessing this was the case, no?

Yes, I've had to deal with this, also.

That is why when making up 1040-es coupons for my clients, and
with rare exception, always print out new ones from my software
using only the one taxpayer's name and ssn on it, according to
whose income the tax attaches, discarding the preprinted ones
from IRS. Then of course at years end,
IF they decide to file la joint return, the payments all come
together anyway.

And I would recommend said course of action to my colleagues, too.

Cheer$,
Harlan Lunsford, EA in LA

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"cm" <charlie.meade[at]verizon.net> wrote

- quote -

I believe that if only your SSN was on the 1040ES, then only
you can claim the estimated tax payments. The source of the
payments itself should be irrelevant. If I made your
payment, you should get credit.

I've run into the opposite problem, where joint estimated
tax payments were made for part of the year, and separate
returns were filed (divorce before year-end), and the IRS
allocated the estimated payments to the primary SSN on the
1040ES even though I prepared both parties tax returns and
specifically stated within a note with the returns which
estimated tax payments (first two quarters) were to be
allocated as agreed to by the divorcing couple. It
eventually got worked out to both parties satisfaction.

--
Paul A. Thomas, CPA
taxman at negia.net

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I am in the middle of a disagreement with the IRS over
credit for estimated tax payments that I made prior to my
marital separation.

Here are the basic facts.

In 2000, my marriage was ending. My ex-wife, who had no
income, retained a lawyer, and was having an affair.

I was making estimated tax payments for capital gains from a
stock account that I managed. The account was in both of our
names, and I made the tax payments from this account.
Because of the uncertainty surrounding the marriage, I
clearly indicated that the payments were only for my social
security number. In effect I (correctly) anticipated that my
filing status would be married filing seperately.

When my ex-wife left the marriage, she took a large sum of
money from the stock account. I pointed out that these funds
had a large unpaid capital gains tax liability, which she
would be responsible for.

When she eventually paid her taxes at the end of 2001, she
claimed credit for half of the esimated tax payments that I
made in 2000. When her accountant prepared her taxes, she
had a copy of my married filing seperately return. The IRS
accepted her claim, and debited my account for this amount.

I believe this is unfair, and my case has been considered by
the Office of the Taxpayer Advocate. They have said that the
IRS acted correctly. Quoting example 3.3 in Publication 505,
they note that the IRS will allocate *joint* estimated tax
payments according to tax liability between divorcing
couples, if they cannot agree themselves on the allocation.
I counter, that the payments were not "joint" because I
specifically made them to my social security number (written
on the check and form, which I have copies of). The taxpayer
advocate says it is automatically "joint" if it is paid on a
joint account. Is this true? I have had long discussions
with tax advocate, and they seem to agree with my view that
the definition of "joint" is not spelled out in any
publication. Even though I thought I was taking explicit
steps to make seperate payments, they seem to take the
default view that it was joint because it was made from a
joint account. However, they said that it would not be joint
if I had taken the funds from the joint account and used
them to write a cashier's check for the payment. They are
consulting with their lawyers on this issue. I would greatly
appreciate anyone's views on the topic.

Because there is some relevance for the case, the events all
occured in Washington DC (i.e.,not a community property
state). Also, I'm not sure if its relevant for the case, but
at the end of the divorce, my ex-wife ended up with ~75% of
the stock account which generated the original liability.

Thanks for your help.

Charlie

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