Overpayment applied after divorce

[Margaret CPA in OH]

Couple had substantial overpayment applied to 2016 federal return but divorced mid-year.  How to split or apply for 2016?  In MFJ vs MFS, one partner had no tax liability so it really should go to the high taxable income partner, imo, but how to do that?  New things for me this year after 20+!  It's always sumthin...

[Lion EA]

If it came from a joint return, I think it's 50/50 unless they agree to a different split.  Or, unless you can trace the original funds to a different ratio.  I would not get involved in the decision.  I would ask them how they want it split -- explaining that it will be 50/50 if they cannot agree.  Good luck.  Are you really trying to prepare both returns when you already can see at least one conflict of interest?  Make sure you have each one sign an agreement where you disclose your potential conflict.  I'd send one or both elsewhere; I don't have time in March to deal with divorce issues.

[Margaret CPA in OH]

This is all rather amicable and I haven't experienced or seen any issues.   My question is how to make sure that their decision is recognized by IRS.  I've dealt with couples filing separately when beneficial but having made joint estimated payments prior and attached a letter on a mailed return as to the split.  My question is whether the IRS computers will recognize that all the overpayment from a joint return is applied on one SSN now.  Although paid from a joint account, the lower income person isn't arguing or contesting that the estimated tax paid in and overpayment were from and for the higher income person. 

[BHoffman]

I might suggest the primary taxpayer (usually husband) listed on the 2015 return take the entire overpayment and then let him write her a check for whatever amount they agree on. 

[Margaret CPA in OH]

Maybe a good idea but the primary is the low income with no tax liability so 100% would be refunded.  That may be a simpler solution so I will suggest it.  At least the first SSN would match, wouldn't it?  Thanks for the suggestion!

[jklcpa]

If ATX doesn't have a way to generate a descriptive statement then I'd suggest you create one or use a preparer note if that goes with the e-file that will put the IRS on notice that estimates were paid on a joint basis and how they are being claimed. Include the social security numbers of both parties and how much each is claiming.

Drake has a check box for joint estimates that were paid with a former spouse, and it has a link to a blank descriptive schedule for the preparer to use if the couple is still married and are using MFS filing status, and instructs the preparer to include the SSN of the other spouse in that schedule.

[grandmabee]

there is no problems NOW but.....  in the past IRS has given it to every has filed first and then we had to write a letter stating which part when to which return.

I think the computer automatic pick up first SS number so maybe file spouse first.  But I do agree you need to get sign conflict of interest form