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Tori Spelling and Dean McDermott are back in the headlines after their finalized divorce revealed more than $1.7 million in unpaid federal and state taxes.
While celebrity outlets have zeroed in on the staggering numbers, the deeper story sits inside the tax and family law issues that determine how debts like this get divided.
Their case touches on federal tax obligations, California’s approach to marital debt, and how courts handle large liabilities during divorce. Here’s what happened, what the law says, and what ordinary people can take away from cases like this.
June 2023:
The couple publicly announced their separation after 17 years of marriage.
March 2024:
Spelling filed for divorce nine months after the split. Court documents later showed the pair had extensive unpaid tax liabilities, including federal income taxes and California state taxes.
September 5, 2024:
In a Los Angeles Superior Court filing, McDermott disclosed that Spelling’s income fluctuated significantly—between $3,000 and $75,000 per month—while reporting that his own earnings had dropped to $3,800 per month due to industry changes and the effects of the SAG-AFTRA strikes.
November 2025:
The final judgment in their divorce became public. According to filings obtained by major outlets, the pair owe $1.2 million to the IRS and more than $500,000 to the California Franchise Tax Board.
They will each be responsible for at least $600,000 of the IRS debt, and the California tax debt will be split evenly. Additional debts—including credit cards, private loans, medical bills, and an old six-figure bank loan were also itemized.
Their divorce is finalized. Custody, support arrangements, and debt division have been agreed to, and the financial terms, including the tax liabilities are now part of their binding judgment.
This matter is primarily a family law case involving the division of marital debts at the end of a long-term marriage.
Because the couple owes more than $1.7 million in unpaid federal and state taxes, it also crosses into federal tax law and California state tax enforcement.
When back taxes accumulate during a marriage, divorce courts must address how to divide responsibility while tax authorities retain the right to collect from either spouse.
The couple announced their split in June 2023. (@torispelling Instagram)
California is a community property state, which means debts incurred between the marriage date and the date of separation are generally considered joint obligations.
This includes tax liabilities, loans, and credit cards, unless a spouse can show that a particular debt did not benefit the marital household.
For federal taxes, the Internal Revenue Code determines how the IRS assesses liability and collects unpaid amounts.
California Revenue and Taxation Code governs state-level tax debts. Even when a divorce court assigns responsibility to one spouse, the IRS and the California Franchise Tax Board may still pursue either spouse until the balance is fully paid.
A spouse may request innocent spouse relief from the IRS if they did not know about inaccurate returns or underpayments, but this relief is granted only in narrow, fact-specific circumstances.
The burden rests on the taxpayer to prove they lacked knowledge or involvement, and family courts cannot override federal tax findings.
When dividing debts, California family courts look at when the obligation was created, whether it benefited the marital community, and each spouse’s current financial situation and earning capacity.
Judges also weigh any settlement agreements the spouses reach.
However, even after a court divides the debt, tax agencies are not bound by the divorce order. In practice, this means one spouse could still be pursued for the entire balance if the other fails to pay.
Couples with significant tax liabilities often must negotiate separate repayment plans with the IRS or the state, and it can take years to fully resolve large balances, especially when interest and penalties continue to accumulate or payments depend on fluctuating income.
What happens when divorcing spouses owe federal back taxes?
The IRS can pursue either or both spouses for the entire balance if the liability was incurred through joint tax returns. A divorce decree may assign responsibility, but it does not limit federal collection rights. Spouses often need to work with the IRS separately on repayment plans.
Are tax debts always split 50/50 in California?
Not necessarily. While community property rules start with an equal division, courts can account for financial misconduct, earning disparities, or voluntary agreements. However, in many cases—especially when the debt accumulated during the marriage—courts do split the liability equally.
Can one spouse seek “innocent spouse” relief?
Possibly. Federal law allows relief in situations where a spouse did not know about inaccuracies or wrongdoing related to tax filings. But eligibility is fact-specific, and the IRS makes the final determination, not the divorce court.
Does celebrity income volatility affect debt division?
Yes. Courts often examine actual income, earning capacity, and financial stability. For individuals whose income fluctuates—such as actors, influencers, or gig-based professionals—judges review historical earnings and current conditions before finalizing support or debt allocation.
What about private loans and credit card debts?
Personal debts are reviewed the same way as tax liabilities: courts look at when the debt was created and whether it served the marital community. If a debt benefited both spouses during the marriage, it usually becomes a shared responsibility.
For anyone navigating a divorce that involves back taxes or unresolved financial obligations, the issues raised in this case are far from unique.
When spouses owe federal or state tax debt, both parties may remain legally responsible regardless of how a judge allocates the liability in a divorce decree.
This means that even if a court assigns the balance to one spouse, the IRS or state tax agencies can still pursue the other until the debt is fully paid. Individuals in this position often need to negotiate separate payment plans, installment agreements, or settlement options directly with tax authorities.
Tori Spelling and Dean McDermott during an outing in California, Sept. 1, 2022.
Income fluctuations also play a major role in how courts calculate support and divide debt. Judges typically review pay stubs, tax returns, and long-term earnings patterns rather than relying on a single high or low month.
For households with unpredictable income, such as actors, freelancers, or gig workers the court may use average earnings to determine a fair distribution of responsibilities.
When it comes to credit cards, private loans, or medical bills, the timing of the debt is equally important; obligations incurred during the marriage are usually treated as shared unless there’s evidence they did not benefit the marital community.
This case is unlikely to set formal precedent because trial-level divorce judgments do not create binding legal rules for future cases.
However, it does highlight a persistent issue in California family law: what happens when significant tax debts remain unaddressed for years and only surface during a divorce.
The situation also reflects a broader trend in high-income and fluctuating-income households, where tax liabilities can become more consequential than the division of assets.
While the ruling itself won’t change the law, it underscores the need for consistent financial transparency and proactive tax compliance during the marriage, not just at the point of separation.
In the best-case scenario, both spouses work with the IRS and the California Franchise Tax Board to establish long-term repayment plans, make consistent payments, and avoid additional penalties or tax liens.
These agreements can span several years but allow both parties to satisfy their obligations without immediate financial disruption.
The worst-case scenario involves missed payments or non-compliance. If either spouse falls behind, tax authorities can impose liens on property, garnish wages, or levy bank accounts.
Interest and penalties can compound quickly, making the debt substantially larger over time.
A realistic middle outcome, based on similar cases is that each spouse maintains separate installment plans while continuing to comply with the financial terms set out in their divorce judgment.
Public scrutiny often encourages timely payments, and most individuals ultimately work toward resolving the debt over time rather than risk aggressive enforcement actions.
Legal analysts commonly point out that large tax-related divorce cases depend on the accuracy of past returns, the timing of the debt, and each spouse’s knowledge of the family finances.
Courts tend to prioritize detailed documentation and transparency when evaluating how to divide responsibility. Practitioners also emphasize a critical point: tax agencies are not bound by divorce rulings.
Even after a judge allocates the debt, the IRS and state authorities may still pursue either spouse, making cooperation with tax agencies essential for long-term resolution.
The Spelling–McDermott case underscores how tax debts can reshape a divorce, even years after the liabilities first arose.
The law treats most debts incurred during a marriage as shared, and tax agencies maintain broad authority to collect regardless of how courts divide responsibility.
For ordinary people, the case is a reminder that unresolved tax issues rarely stay hidden and often require coordinated legal and financial planning.
Ultimately, it highlights the importance of transparency, documentation, and timely communication with tax authorities during marriage and especially during divorce.
Can the IRS still collect from one spouse if the divorce says the other must pay?
Yes. A divorce judgment divides responsibility between the spouses, but it does not limit the IRS’s legal authority. The agency may collect from either spouse until the debt is fully satisfied.
How long does the IRS give taxpayers to pay back large debts?
Many taxpayers qualify for installment agreements, which can extend for years depending on the balance and financial situation. The IRS reviews income, assets, and expenses before granting long-term arrangements.
What rights do spouses have if they believe the tax debt wasn’t their fault?
They may apply for innocent spouse relief or similar protections, but approval depends on the facts of the case. The IRS evaluates whether the person knew—or had reason to know—about the underlying tax issue.
Are debts always split evenly during divorce?
Not always. Courts look at when the debt was incurred, who benefited from it, and any agreements between the parties. Equal division is common but not guaranteed.
