OIC for one spouse

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    Shawn Wright

    I have a client who owes around $80k and would otherwise be a decent candidate for an OIC. He and his wife live together and they filed a joint return in 2013 and currently owe $13,000. The remaining years are filed married and separate. The husband wants to do an OIC in his name alone. Is this possible? Obviously, we would use all household income, but we are trying to avoid using her 401k which is modest, but which she doesn’t want to have to liquidate.

    Michael Diyanni

    Yes, this is possible. More information is needed. You don’t just have to combine the entire household income. Take a percentage. Her 401k will not be included for his liability if MFS

    Use The Reasonable Collection Potential = Net Equity in Assets and Future Income. Begin Analysis for Future income with below

    1. What is his income?
    2. What is her income?
    3. Household Size
    4. Expenses Analysis
    A. Housing Utilities – Shared % based on income
    B. Food, Clothing, Misc – Shared % based on income
    C. Auto – only his exp
    D. Health care – Only his exp
    E. Taxes – Only his exp
    F. Other – Only his exp

    Michael Diyanni

    I forgot the exception Community Property State
    What State?

    Eric has a great book about Community property in the Toolbox.

    Eric Green

    If I understand, its a 2013 joint liability. If its a joint liability he can do an Offer and compromise his share but she will still be on the hook for the balance. So if the concern is to protect her 401k I am not sure what this is accomplishing.

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