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Question:

My fiancé sold a property in Florida back in 2018. He was away in the military until this year and now that I’m doing our taxes, I’m worried that it will become an issue as he never paid capital gains. Since it was years ago, there was a section to add it in on the online tax company I used. How can we pay the federal and state taxes on this sale? Will it be an issue now years later? Will we have to pay both the Florida and Massachusetts taxes on it (he is and always was a Massachusetts resident only)? No one has contacted us about the sale and we’ve received nothing in the mail.

Response:

Your fiancé should have received a statement from the closing company for the sale with the tax information and he should have reported it on both his federal and Massachusetts returns for 2018. That’s the easy answer. How to rectify the situation is more difficult, and really one more for a CPA than an estate planning attorney like myself. It would probably involve amending your fiancé’s 2018 returns, assuming he actually filed back then. If he didn’t, he can file now. In either case, he also may have to pay interest on the unpaid taxes. It’s possible that an abatement may be available since your fiancé was deployed in the military at the time.

There’s a 10-year statute of limitations for unpaid taxes, so in 2028 your fiancé will no longer be liable for the unpaid taxes.  In any case, a CPA could tell you more about how you can fix the situation and the risk of not doing so now. He or she can also calculate the amount of taxes and interest due and advise you on the availability of an abatement of the interest.

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