I’ll try to make this short into the point.
I filed for a divorce At the end of 2024, we live in a community property state.
On the date of separation we had about $80,000 in our two accounts, over the course of 2025, I pulled about $16,000 out of the business account. Today I just got a letter that he issued me a 1099 misc, as if I am an independent contractor.
When I asked him why he did this. He explained that it was for the money that withdrew from the account, the community property. He’s saying that I have to pay taxes on it, I have not worked at this business since 2021.
I actually did not work at all in 2025 because I’m a full-time student and I had not been planning to file taxes but I just got this letter on March 28 and now I don’t know what the hell to do. Is what he did even legal? Does anybody have any idea what I should do?
Soon to be ex Husband issued me a 1099, even though I don’t work at his business
byu/deathbeforedecaffff intax
Posted by deathbeforedecaffff
8 Comments
You should talk to your divorce attorney
This sounds like fraud.
not every community property state is identical, you should talk to your attorney
from one perspective, this is a distribution from the business account, to him and then a transfer to you
from another perspective, if the owner of the business doesn’t want to do it the first way, it’s a payment to you for … something. Hence the 1099.
you need to talk to your attorney and decide how to proceed.
someone has to pay taxes on that $16k
How is the business set up tax wise? Is it an S or C Corp or sole proprietorship?
Who is paying taxes on the income from the business?
The answer to this varies on what state you’re in, how his business is set up, if you’re a part owner of the business etc. If the business was reported on schedule c of your joint return (or on his married filing separate return) it’s not taxable to you, even though you’ll need to report it.
Anything else, though, and we’d need more information. But really your divorce attorney probably knows a CPA that you can talk to.
He’s trying to claim it as a business expense, which it clearly is not, to avoid paying tax on it and have you pay the tax on it (which is a reasonable goal, even though he went about it incorrectly).
Probably the most reasonable thing to do would be for him to issue a corrected 1099 with zero income in exchange for you paying him the tax on the amount you received. (That would actually cost you more than filing your own tax return with $16,000 in income.)