I’m thinking about a Big Love type of arrangement. The husband/father is the only one with income, that is distributed to the 3 wives and their children. They also have 3 houses and various types of debt related to them. Wouldn’t the IRS come knocking wanting to know how 2 of the wives could support nice houses and multiple children on no income?
AFAIK, there’s nothing illegal about giving someone else money. Obviously, only one of his wives is recognized by the government, so that is the one that goes on the taxes. And all his children still count as dependants. If nothing else, he can claim the money he is giving the other two wives is child support. Is there a crime in paying more child support than the minimum?
The “conservative mormons” know all the ins and outs of the law, there are some that even depend on welfare and food stamps and it’s legal. They don’t want to expose their lifestyle to any illegalities, especially federal laws.
There’s absolutely nothing illegal if I have a house and let my friend stay there. There’s nothing illegal if I have a house and give it to my friend. There’s nothing illegal if I have a couple of children with my friend, and then let her stay in a house that I own along with our kids. And there’s nothing illegal about getting a checking account that I deposit money into that my friend can write checks from.
You can only be legally married to one person at a time. But you can legally have sex with, and have children with, and give support to as many people as you wish.
bouv and lemur: I suppose the legal issues are just one item to consider. But they are also attempting to hide their polygamist relationship, and one man supporting 3 families is uncommon enough to invite an audit. If it looks like a duck…
IIRC, you can only give someone so much money as a gift before it becomes taxable. ($10,000 a year sound right?) If so, while it may be perfectly legal to give someone $35,000 (just to pick a number) to run a household for a year, that money would end up being taxed twice - once as income by the original earner and then again as a gift.
That being said, where does one draw the line between giving a large gift and letting someone stay in my house for a year and providing them with a stocked larder, closet of clothes, etc.?
Zev Steinhardt
The ‘conservative mormons’ you mention aren’t actually mormon, aka Church of Jesus Christ of Latter-Day Saints. They’re splinter groups. The LDS church doesn’t recognize them as members.
I don’t think I agree with this. The federal government doesn’t recognize their polygamist relationship.
If the man and one of the women are married legally, they would file as a married couple. I dug around the IRS website (particularly Pub 501) to check into Head of Household status. If the guy and one gal aren’t married, he could potentially be considered head of household, if he’s providing all the financial support. But it’s a pretty complex process, and from what I can tell, if you’re supporting someone who is not legally related to you, you don’t qualify.
It sounds like your beef is with the support that the women receive. And whether or not they claim it as income. Is that about right?
If I recall correctly, the gift tax limit is $10,000 per person per person. So if I had a special friend with two children, I could give her $10,000 and each of her children $10,000, and my wife could give her $10,000 and each of her children $10,000.
And if those children are mine, supporting them is my obligation anyway, although I imagine the IRS counts child support payments as income for the custodial parents. I could be wrong about that, since in theory child support goes to the child, although since the custodial parent is the child’s guardian they can spend the child’s money as they see fit.
But I don’t think polygamous families have to do a lot to keep things a secret from the IRS. You can live with, sleep with, and have children with anyone you like. You don’t have to keep the fact that you’re sleeping with several women, fathering children with several women, and financially supporting several women secret from the IRS. You break absolutely no tax laws by doing so. Why would supporting 3 families make you a target for an audit? And even if you were audited, that means nothing, because you’ve broken no laws unless you try to claim that more than one of those women is legally your wife. That you call her your wife in private is no one else’s affair, and breaks no laws.
Well, some states do have laws against adultery still on the books, so you might technically be breaking the law if you have sex with someone you’re not married to. But those laws are unenforced and unenforceable, and would be likely to be thrown out by SCOTUS if they tried to enforce them. And the IRS doesn’t care if you break a law against adultery as long as you pay your taxes according to the law.
Lemur, from Turbo Tax’s website:
In 2005, you can give a lifetime total of $1,000,000 in taxable gifts without paying a gift tax. But many gifts are not taxable, so they do not count as part of that lifetime total.
AND
Present-interest gift of $11,000 per recipient per year. Present-interest means that the person receiving the gift has an unrestricted right to use or enjoy the gift immediately. You can give amounts up to $11,000 to each person, gifting as many different people as you want, without triggering the gift tax.
http://www.turbotax.com/articles/TheGiftTax.html
So I guess inflation has hit. 
Now I’m looking through IRS Pub 17 at what’s considered “Other Income” and there really isn’t anything about sponging off another human being. If you barter, the FMV of what you provide is taxable. But there isn’t anything I can find that would fit in this situation.
Of course, I am not a tax accountant, tax preparer or tax attorney. I’m just a nerd.
“AFAIK, there’s nothing illegal about giving someone else money.”
What he said.