Protect Your Finances With Our Guide To Mirrored Accounts
What Is A Mirrored Account?
A mirrored account refers to the procedure of separating a joint account into two. The IRS adopted the concept of mirrored accounts in order to ensure they will be able to collect tax debt from both liable parties. When the IRS “mirrors” an account, what they’re actually doing is splitting the “married filing jointly” account into two individual accounts. The IRS follows this procedure in order to track and administer collection activity pertinent to each individual. Mirrored accounts are typically processed in situations when taxpayers owe debt jointly but are no longer married.
The Correlation Between Divorce And Mirrored Accounts
Although the divorce rate in the U.S. has decreased in the past ten years, divorces still affect many taxpayers across the country. As a result, the IRS has implemented the use of “mirrored accounts.” This procedure may be beneficial to recently divorced taxpayers as mirrored accounts allow each taxpayer to be held liable for their own accounts. Additionally, these separated accounts reflect the accurate amount of debt owed by each taxpayer– individually.
How Do Mirrored Accounts Work?
Mirrored accounts exist as a financial stepping stone from marriage to divorce. The process of “mirroring” an account would split the Married Filing Jointly account into two separate accounts. For example, Bob owed the IRS $20,000 when filing jointly with his ex-wife, Jane. With a mirrored IRS account, however, both taxpayers are now liable for $20,000 individually. The IRS will go after both taxpayers separately to collect the unpaid tax.
Here’s the tricky part– mirrored accounts aren’t completely detached from one another. For example, if one taxpayer achieves an Offer In Compromise (OIC) settlement, the other taxpayer is still liable for the debt. Additionally, if one taxpayer successfully initiates a payment plan with the IRS, the other taxpayer’s debt will also decrease. These factors are a direct result of the mirroring process. Both accounts will reflect payments made by either party, thus the term “mirroring.”
How A Mirrored Account Could Affect You
Tax debt is a burden to taxpayers everywhere. However, once you add divorce and mirrored accounts into the equation things can get even more difficult. Mirrored accounts will still have a faint connection to each other until the debt is completely paid off. Though resolving your tax debt may seem like a lot of work, in the long run it will save you plenty of time and sleep.
At Lifeback Tax, we specialize in tax resolution! We have achieved negotiations for our divorced clients all across the country through the IRS’ Fresh Start Program. If you’re struggling with back taxes and don’t know where to turn, give us a call at (855) 605-1500 for a free, no obligation consultation. Or send us an email at [email protected]