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Divorce Versus Annulment
By Julian Block

According to the dictionaries, there is a difference between a divorce and an annulment. The courts grant a divorce to mark the end of a marriage that was valid when entered into, whereas an annulment is for a marriage that at no time was valid, as when one of the parties was under the age of consent at the time of the marriage.

To a couple interested only in the fastest way to untie the knot, the question may seem to be an unimportant technicality. Those watchful souls at the IRS, however, think that there is an important difference when Form 1040 time rolls around.

According to an IRS ruling, if an annulment is retroactive, the couple was never married. Result: They had no right to file joint returns (Revenue Ruling 76-255).

EXAMPLE. John and Mary married in 2001, filed jointly for that year, and had their marriage annulled after the filing deadline. Because their marriage was declared null and void from its very inception by the annulment decree, they are considered to be unmarried at the end of 2001. Consequently, they were ineligible to file jointly for 2001 and must refile under the rules for unmarried persons, which can mean higher taxes.

TIP. This ruling involved only a one-year marriage. Nevertheless, the theory would presumably apply regardless of the marriage's length. On the plus side, refunds may be available to couples whose marriages were annulled and who would have paid reduced taxes as single persons.

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Press Reviews
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- "Block's book covers all the bases on tax planning... The language is easy to understand and the examples are plentiful" New York Daily News