What happens in Vegas, stays in Vegas.
Stand-up comedian Janeane Garofalo found out that was no joke – the hard way.
Over the weekend, Garofalo found out that she was married to Rob Cohen. Cohen, best known for producing the Big Bang Theory, dated Garofalo for about a year before hitting Vegas one night in 1991. After a few drinks, the couple got married at a drive-through chapel in a cab. That marriage was legal – unbeknownst to Garofalo and Cohen – and they were married “for real” until they legally dissolved the marriage twenty years later.
It sounds impossible but it happens. According to family lawyer David Crosson of Philadelphia, Pennsylvania, despite the giggles and funny movies, “Vegas weddings are no joke.” You can, he said, “absolutely… stay married without knowing it.” Fortunately for Garofalo, the fix may have been just as simple as Garofalo suggested, when she said that she and Cohen dissolved the wedding over the weekend in the space of about 30 minutes. Crosson suggests that, depending on the circumstances, even if the marriage weren’t annulled, it might have been a relatively easy fix since neither party realized that they were married.
With that, Garofalo can go back to being single and Cohen can move forward to his upcoming marriage to Jill Leiderman, a producer on Jimmy Kimmel Live.
Except for three little letters: IRS.
For the last 20 years, Garofalo, who made millions for her work in stand-up and in such films as Reality Bites, The Cable Guy, and 200 Cigarettes, over the past twenty years, has likely been filing her taxes as single. Likewise, Cohen, who didn’t do so badly himself over the same time period has also likely been filing his taxes as single.
So, for 20 years, Garofalo and Cohen have been filing tax returns with the wrong marital status. If that had happened in today’s tax climate, they would likely be just fine: joint filers tend to have a reduced or relatively equal tax bill to two single filers with similar incomes. However, the 1990s, when Garofalo and Cohen got married, were the heyday of the so-called “marriage penalty” when it was actually disadvantageous to file jointly for double income married taxpayers.
Here’s the quick history: in 1948, Congress adopted a joint tax return for married couples. Years later, the joint tax return became problematic with the rise of the two-income family because it was difficult to work out equitable deductions and tax rates for a “one size fits all” family. In 1969, Congress changed the rules to provide for a joint return for married persons with a scaled-down deduction equal to less than two single filers. This system, with some minor concessions in 1986 to higher-income joint filers, remained in place for more than thirty years.
By the 1990s, single filers who lived together without being married enjoyed tax advantages not available to married filers. This happened because, as individual income levels rose, so did the income tax brackets for single filers. However, single filers retained the full personal exemption and standard deduction, unlike married filers.
Additionally, the impact of the “phase out” which limits or eliminates many deductions and credits at certain AGI (adjusted gross income) levels was more dramatic for high-income married filers than for high-income single filers so married couples lost itemized deductions and personal exemptions more quickly. As a result, capital losses and passive activity loss deductions were less favorable for a married couple than for two single persons – in some instances, a married couple’s total loss deductions were equal to a single person’s loss.
As you can imagine, this didn’t make married taxpayers happy. In 2001, a bill was signed which offered some relief for married couples. The tax law gradually increased the standard deduction for married taxpayers who file jointly to an amount equal to twice the standard deduction of persons filing a single return, resembling the original 1948 bill that allowed two full deductions for married couples regardless of the level of income. This increase was phased in over five years beginning in 2005 – about 15 years after Garofalo and Cohen got hitched.
So what does it all mean? Chances are, if IRS were to target the couple, they would owe additional tax. Fortunately, the statute of limitations likely bars the IRS from going back any further than 2008 (assuming no fraud and timely filings).
I am sure Garofalo and Cohen have tax and family law counsel on it, to ensure that it doesn’t become a bigger deal. For her part, Garofalo, who has since stopped drinking, was able to joke about the ordeal, referring to it as “a 20-year hangover.”
