Legal Question in Tax Law in Illinois

There will be a number of components to your distributions. The principal (the amount you contributed) is not taxed upon distribution. You will pay tax on the investment income generated. You may also have to pay a 10% penalty on the withdrawals if the funds were not used for education.

Filing a separate return would allow you and your husband to separate the tax.

Filling separately usually (not always, you have to run the calculation) results in a greater amount of tax payable. If you file separately, where will you get the funds to pay the tax? If you and your husband are living together in the same household, his income will be considered by IRS to determine how much you should pay. The IRS has a "streamlined" payment program. Under the "streamlined" payment plan, if you can pay the taxes you owe in installments over five years or less, you will be able to enter into an installment agreement without having to provide a financial statement to IRS. The specific terms available depend on how much you owe.