I recently got a call from someone who filed a joint tax return with her husband expecting a $14,000 refund. Instead, she got a letter from the IRS that told her the refund will be applied to her husband’s large tax debt that was in place before they got married.
Thankfully, she can get at least a portion of the refund by filing an injured spouse claim with the IRS. But the claim will take at least two months to process, which means she might not get the money until after the holiday season.
Understandably, she was in an agitated state. But I’m in no position to pry or lecture her. And besides, it’s not going to make her feel better nor get her refund back faster. So I just listened to her venting about her spouse and her plans to use the money to replace her car with 300,000 miles on it and get gifts for family.
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We then talked about what she knew about him before they got married. She said he was very charming, was dressed well, and was generally good to her. She assumed he was financially responsible so she didn’t ask about his finances as she feared that it would create a strain on the relationship.
I then asked her if she would have married him had she knew about his large tax debt. She said that she didn’t know.
I’m old enough to know that love does not conquer all. Money matters. Since most married couples share their finances completely or at least in some form, it seems obvious that both parties should conduct a minimal level of due diligence of their significant other’s financial history.
While many couples will be honest with each other about this, there are some who will want to keep this information to themselves. In this case, how can a potential spouse obtain this information if the other spouse will not disclose it on their own? A Google search will not reveal a person’s total debt nor their FICO score. And conducting a background check behind someone’s back can be expensive, difficult, and could create conflict.
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Shouldn’t there be a way for a potential spouse to get this information before deciding whether to marry?
Perhaps the solution is to impose a disclosure requirement in order to obtain a marriage license. Before the city or county clerk issues an official marriage license, each potential spouse should be required to submit to a background check for the other to review. This can involve credit checks and criminal histories. But there is a practical problem: Most people apply for marriage licenses after they are engaged and during the wedding planning. Some might be reluctant to call off the wedding especially if substantial money has already been spent and many people may be traveling from afar to attend the wedding.
Some will not like the idea of people snooping through their fiancée’s past. It kills the romantic buzz. Demanding a background check could negatively affect the trust in the relationship. And sometimes, the negative credit entries might be false, but the credit bureaus refuse to remove it.
Also, it might make otherwise good people appear unmarriable. A lot of us have financial skeletons in the closet. There might be a delinquent credit card bill or two. Or a tax debt. And of course, almost every young person these days will have student loans.
But then again, if a spouse is hiding something, the other will find out eventually, usually at the worst possible time. So isn’t it better to know now rather than later? Sure, some engagements will be broken because one (or both) spouses have a checkered financial past. But for others, the sooner they know, it might be possible for them to set up a financial plan together taking into account any debts or credit blemishes.
Most couples will be honest about their finances with the other before getting married. But some people will not be as forthcoming for their own reasons. To avoid financial surprises, should the government make it easier for people to obtain their fiancée’s background information before getting married? Or will easy access to personal information sow distrust and thus negatively affect the sanctity of marriage?
Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at [email protected]. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.