Ahh, our majestic government, protecting the sacred ideals of the nuclear family. Striving—yea, even through income tax policy—to see that the struggling American family will not die. Ah life. Ah love. Ah hogwash.
Because, you see, there is a thing popularly called "the marriage tax," wherein people who desire to be married, and who are both employed outside the home, are forced to pay extra taxes. Often thousands of dollars in extra taxes. Which means that, through national tax policy, people are penalized for being married—and thus encouraged to just live together In Sin.
This whole problem has been much in the news over the last several months. Seems a couple of crusading lovers, with an on-again, off-again marriage, got nabbed by the IRS for sneakily beating the marriage tax. "Pay up," snarled The Service. "Get Lost," said Angela and David Boyter, when they were presented with a $3,134 bill in extra taxes for their 1975 and 1976 returns.
It seems the Boyters didn't like paying several thousand dollars in extra income tax each year, just for the privilege of being married. So they flew off to Haiti in December of 1975, had a wonderful time, and got divorced. One good party deserves another, they must have thought, so they turned around and remarried in January in their home state of Maryland. The end of 1976? They flew to the Dominican Republic—what the hell, never been there before—had a ball, and got divorced. Then remarried back home in early 1977. And then they did it again. Tax savings? They figure it to be about $15,000)—or, considerably more than it cost to take those trips to the sunny Caribbean.
The trouble was, the IRS decided to take them to court over it. So the couple decided to fight it. Right on up into the US Tax Court. Came the decision in early August: pay up. But here's the funny thing: the Tax Court didn't rule on the IRS's argument that the divorces should be overlooked as "sham" proceedings to save on taxes. No, the Tax Court decided the issue on the narrow grounds that, even though Maryland courts hadn't considered the problem of such foreign divorces, the Tax Court could choose the rule they "believed" the Maryland courts would have chosen if they had ruled on that issue—namely, that the foreign divorce decrees were not valid for Maryland residents.
So, even though the Boyters are going to have to pay up, there are no Tax Court (or other) cases which say you can't take a nice trip each year, get divorced while vacationing, then pay for the trip with your tax savings. The whole idea appeals to me, in fact. I'm just waiting for the couple who not only take the savings from being divorced but also deduct the expenses of the trip as expenditures made for tax savings. Now that would be a nice fight.
Should you do it? Well, it's not against the law, despite what the IRS says. What it boils down to is whether you and your spouse are both working and you obtain a divorce that is recognized as valid in your state. If so, the more bucks you're both making, the more likely that a merry-go-round divorce will pay off for you. And with no-fault divorce laws prevalent in America today, you could dispose of the issue that sank the Boyters by doing the act in your own home state (or in another' state or country by establishing domicile in accordance with your state's requirements).
In our happy divorcers' case, they were each making about $33,000 a year. If you and yours are each making about $25,000 a year, your tax savings this year could be (in the absence of any other tax breaks) on the order of $2,874. Or, if you're both pulling down $15,000 a year, you could save $907.00 by being divorced—still enough to pay for that Caribbean party, for some.
Of course, there's also the fact that most people won't even be audited or checked—and even then the chances are large that such little indiscretions would be missed. In the meantime, as Time magazine pointed out, "relief may be spelled C-o-n-g-r-e-s-s." But it probably won't come till next year.
So if you've got a mind to try it, you'd better jump on it right now. This issue is probably in your hands in mid-December. To take advantage of this unique tax-saving device, you've got to be legally divorced as of midnight, December 31. All right, get your bags together. Use that Christmas stash your in-laws dumped on you. Don't forget the golf clubs. Good luck. God be with you. And don't forget to write…let me know how it turned out.
TAX QUESTIONS Q: For tax purposes, is there a limit to the amount donated to charities, educational foundations, and churches? —D.G., Katy, TX
A: The charitable deduction limit for individuals is normally 50 percent of adjusted gross income (found on line 31 of the 1980 Form 1040). This rule applies for most of what we all know as "charitable" institutions and tax-exempt foundations. If there's any question in your mind about the status of such an organization, you should check with them or an income tax manual. Different rules apply, involving different limitations, for contributions of capital gain property. Ditto for donors other than individuals, such as corporations. If you're looking to give your money to someone other than the State, my favorites are the Reason Foundation (Box 40105, Santa Barbara, CA 93103) and the Sabre Foundation (325 Pennsylvania Ave., S.E., Washington, DC 20003).
Timothy Condon, a member of the Florida Bar, is a tax specialist with the Condon & Vollrath Tax Service in Tampa, Florida.
This article originally appeared in print under the headline "Taxes: Living and Loving Under the IRS".