Can the IRS take inheritance money left to me by my mom?

Question

I am now divorced and raising one child. My question is about inheritance money and the IRS. I am paying off my X's business taxs. Although I was granted in my divorce, that he pay all taxes, he is self employed and pays nothing. Not one dime. they don't even bother with him for some reason. It's over 100K now. The IRS takes any refund I have, the rebate check that was issued to all of us.. etc. I have put in over 10 K in the last four years. Now that my Mom is putting her will together, I worry they will go after that. I don't want that to happen... Can the IRS take inheritance money left to me by my mom? What should I do to insure they don't take it if they can? Thanks, Karen

Answer 1

Once an inheritance is paid to you from the estate, it is simply your money - the source no longer matters.  So if they can take money from you, they can take the "inheritance money."  They cannot take it while the estate still has it because it is not yet yours.

Answer 2

The IRS shouldn't be touching *any* of your money. Have you tried filing an Innocent Spouse form? It seems like that would stop them from taking any more of your money:

http://www.irs.gov/individuals/article/0...

(Note: this is not the same thing as an "Injured Spouse")

Answer 3

Yes they can.

Why don't you fix this? That is an awful lot of money to shrug your shoulders at. Go back to court and explain that he is not fullfilling his share of the divorce.

Answer 4

Set up an installment agreement to pay your taxes.  The IRS cannot seize assets if you are paying as part of a formal agreement.

Answer 5

Have your mother leave it to your kids in a trust fund.

Answer 6

Your story is unclear.  Why are you paying off your ex's businesses taxes?  If it is not your debt, IRS can't touch it.  If you were partners with you ex, it can.  Provide some more details and I may be able to suggest some alternative actions.

Answer 7

If, by "business taxes", you mean employment taxes, and you were a "responsible party" in the business, then the IRS can seize any money they find in your name, or, for the most part, that you can access.  It's possible that your mother can create a "spendthrift trust" that will provide for your needs but not for your wants, and the IRS might not be able to touch it.

If this is for back income taxes, and you cannot claim "innocent spouse" standing, the situation is about the same.

In either case, you can ask the Court which granted the divorce to seize any assets your ex has, in order to cover the back taxes that Court ordered him to pay.  It doesn't sound as if this will help significantly....

If this is for business income taxes, the IRS can go after anyone who has assets of the business, but is otherwise limited by the divorce court ruling.

If this is for personal income taxes, the requirements for relief, as copied from the IRS web site, are as follows:

1. .      You filed a joint return which has an understatement of tax due to erroneous items (defined below) of your spouse (or former spouse).

2.      You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax (See Actual Knowledge or Reason To Know, defined below).

3.      Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax. (See Indications of Unfairness for Innocent Spouse Relief, later).

4.      A request for innocent spouse relief will not be granted if the IRS proves that you and your spouse (or former spouse) transferred property to one another as part of a fraudulent scheme. A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, ex-spouse, or business partner.

Good luck~

Answer 8

There's some good advice above.  

One thing to watch out for: If the tax debt is joint, the IRS is not bound by your divorce decree.  Your divorce was a private matter between you and your ex--the IRS was not made a party, didn't have a chance to be informed of the arrangements, and didn't have a chance to dispute the divorce judgment.  

Because of this, the IRS can and will come after whichever one of you is easier to collect from.  If they come after you, you are then left with the task of going after your ex to get the money back.