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New client. Never been married but has lived with girl friend for numerous years. They have two dependent children together. Previous tax filings have been filed using the MFJ status. NC is one of the few remaining states that does not recognize common law marriage or cohabitation as a certified marriage. As we all know, that IRS will follow state law regarding marital status in these situations. I have advised these folks that I cannot file their 2020 tax return as MFJ. Not sure how they want to proceed. But if they do stay with me, how many years should they amend the previous filings? Of course, they have the responsibility to do so and nothing in the past obligates me to anything. 

25 years ago, this was addressed in an HRB tax preparer class. At that time, we were advised to do what the client said and stick your head in the sand.  How would anyone here proceed?

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I agree with you, Terry. Just a few miles south, I believe SC still recognizes common law marriage. 

My (very simple, country born and bread) Daddy, John, lived with Myrtle... for a little too long, and she declared them married... Bought herself a very lovely wedding ring set,  and so it was. It passed every Common Law rule. She was thrilled.... Daddy cried for a while... then she fried some more chicken, slapped some biscuits together, and he felt better about it. 

Truth. 

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cbslee. I did not ask, they volunteered the information. As far as your other question, NC will recognize the common law marriage of a couple from another state as being legally married. I believe they do this because a precedent was set in the other state. I did read this but can't remember the exact wording.

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23 minutes ago, Terry D said:

NC will recognize the common law marriage of a couple from another state as being legally married.

It's actually part of the Constitution - in Article IV, where contracts set up in one state are enforceable if the person moves to another state.  That's also why you can't skip out on selling your car, or alimony/child support payments by moving over state lines:  continuity of contracts.  It's also the tactic that was used to get same sex marriages accepted in all states.

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3 minutes ago, Catherine said:

It's actually part of the Constitution - in Article IV, where contracts set up in one state are enforceable if the person moves to another state.  That's also why you can't skip out on selling your car, or alimony/child support payments by moving over state lines:  continuity of contracts.  It's also the tactic that was used to get same sex marriages accepted in all states.

Thanks Catherine,

3 minutes ago, ILLMAS said:

I am the only one that cringes with someone says my wife (and they are not married), my nephew (and it's their cousin kid) or when people say my baby daddy or baby momma.  

No you're not. I'm right there with you. Only under my breath is the holy crap comment.

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Yikes.  Best guess:  Lots of work.  Invalid joint election and lots of extra steps when amending.  IRM 21.6.1.5.7  

I have never had this occur, so I am NOT speaking from experience.  Eager to hear what others have to say.

I'm also interested in whether past invalid filings actually triggered the start of the Statute of Limitations.  I'm thinking the answer to this question would help determine how far to go back?

This could be an interesting discussion.

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Virginia also does not recognize common law marriages that occur within the Commonwealth.  In the past, if couples volunteer such information and I tell them that i cannot file them as MFJ, they just go somewhere else and keep their mouth shut so the question of what to do about prior years does not arise. 

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5 hours ago, ILLMAS said:

I am the only one that cringes with someone says my wife (and they are not married), my nephew (and it's their cousin kid) or when people say my baby daddy or baby momma.  

I am 100% with you on the first and the third, but less so on the second.   I have several friends who were only children, and I am "aunt" to those now-grown kids and refer to them as niece or nephew.  It's a courtesy title. 

Interestingly enough, in centuries past, "niece" or "nephew" was used as a euphemism and familial acknowledgment for an outside-of-wedlock child.  It was especially commonly used by members of the Catholic clergy, who were not allowed to marry.  

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15 hours ago, Catherine said:

I am 100% with you on the first and the third, but less so on the second.   I have several friends who were only children, and I am "aunt" to those now-grown kids and refer to them as niece or nephew.  It's a courtesy title. 

Interestingly enough, in centuries past, "niece" or "nephew" was used as a euphemism and familial acknowledgment for an outside-of-wedlock child.  It was especially commonly used by members of the Catholic clergy, who were not allowed to marry.  

And in some cultures "Uncle" & "Aunt/Auntie" are honorifics, generally used to refer to any respected older (but unrelated) person.

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If MFS doesn't result in very much additional tax, then it's not a huge concern. Besides, our job is only to advise. It's up to the client to decide to amend or not. In some cases, deciding not to amend might make the client too unethical to keep, but in this case, maybe not.

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  • 3 weeks later...

Update,

I guess I will be taking on this challenge. The client was not successful at getting the previous preparer (sold the business) to help with the amendments. I am thinking to amend the last seven years. All returns have been filed on time so the IRS cannot go back any further if there is any money owed, which I am almost positive there will be. No looking at the date the return was filed or should have been filed to start the statute clock. Not sure if stopping at three years will be suffice. On another note, this couple will now be getting married later this year. As mess indeed.

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On 4/10/2021 at 1:35 PM, Lion EA said:

Terry, when did their "marriage" begin and where were they living at that time?

They were never married legally by NC law. They have lived together and produced three children with the oldest in high school. Not sure of the age yet. NC also states that living together for any period of time does not constitute a certified marriage. 

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Correct. Cause if they did and it was in a state where common law marriage is legal, then they are off the hook. NC will accept that.  Believe me I have covered everything I could with these folks. They are good people but were just miss-informed by their previous preparer. I don't like to say that but in this case, it is the truth. I mean, we all make mistakes right? According to this client he informed the prepared they were not married and they were told that they had kids together an lived together for so long it didn't matter. Unfortunately, that is wrong.
 

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Neither is going to be MFS if you split them up- unless one or both were married to other people (which would be a whole other can of worms) Each would be Single then when there was a child one would be Head of household.  depending upon who has what income and how much.... might not be so bad....

Standard deduction for HH + Single is more than MFJ

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52 minutes ago, Hahn1040 said:

Neither is going to be MFS if you split them up- unless one or both were married to other people (which would be a whole other can of worms) Each would be Single then when there was a child one would be Head of household.  depending upon who has what income and how much.... might not be so bad....

Standard deduction for HH + Single is more than MFJ

Not only that, one of them might even qualify for EIC or extra EIC.

1 HH plus 1 Single standard deduction is much better than 1 MFJ.

If one of them file with the two children, they will get also stimulus for the extra one child on the return which $500 plus $600 and since they have not filed yet, maybe they already got stimulus 3 and the parent with the two children will get an extra $1400. Not only that, if next year the parent with no children in 2020 claims the two children next year, that parent will get another $1400.

Regarding amendments... I am always busy. In this case, I would tell the clients, I am going to prepare the return you have hired me to do and I will do it the correct way. You don't qualify to file jointly so I will not do it this year.  You should amend the previous years filings, but I am busy and I cannot do it.  After I prepare your taxes, you can go to HR block or anywhere else to have those amended. 

I don't like to amend what others preparers have done because I was not there when the tax payers were interviewed. Plus I am busy and I decide what jobs to take depending on my schedule.

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On 4/29/2021 at 10:56 PM, Hahn1040 said:

Neither is going to be MFS if you split them up- unless one or both were married to other people (which would be a whole other can of worms) Each would be Single then when there was a child one would be Head of household.  depending upon who has what income and how much.... might not be so bad....

Standard deduction for HH + Single is more than MFJ

I'm a bit confused here. I never suggested MFS. That simply cannot be. They have never been married so only options are single, HOH. I verified they have been together for 18 years and have never lived in another state. My only concern at this point is how many years to amend. IRS statute is 7 years to collect. All tax returns were filed on time, just used the wrong status. I am going to attempt a phone call to the IRS PPL for some guidance. Might be a stretch but I'm at least going to make the effort.

I agree the HOH and Single deductions together is more than MFJ. Agree also, this might not be too bad. There are years where only one worked. That may be a little more expensive year. This is indeed a summer project for me. Client agreed to file 2020 separately or HOH for each and which ever status returns the best outcome for both. Then I'll tackle this mess.

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22 hours ago, Terry D said:

They have never been married so only options are single, HOH.

The only "option" is that they can agree on who should claim the children.  If they are treated as one household, only the one that paid more than half of the household costs can be HOH.  If they are treated as two households sharing living quarters, only the one with the higher AGI can be HOH.  They cannot split the kids and each claim HOH.

22 hours ago, Terry D said:

There are years where only one worked. That may be a little more expensive year.

In those years, the one who worked may be able to claim the other as a dependent.

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