Jul 28, 2025
Sarah and her husband rent a place in Los Angeles and are expecting their first child. But she called into The Ramsey Show because of a tricky situation involving her mother-in-law, homeownership and the IRS — one that caught host Dave Ramsey off guard.
Why? Because this caller’s situation includes $1 million in debt and potentially deceiving the IRS.
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“Sarah, there’s just so much going on here that you’re not talking about or you don’t know,” Ramsey said in a clip posted July 12. “And it’s really, really scary. There’s a line of crazy running through this conversation.”
Here’s what was revealed during the exchange.
A questionable situation
Sarah’s mother-in-law currently lives with the couple in their rental home. However, Sarah says her grandmother-in-law has offered to buy her mother-in-law a house in Sarah and her husband’s names so her mother-in-law “is not docked by her unpaid debts from the IRS” — and the three would continue to live together in the new house.
“She has a lot of unpaid debts and so grandma is trying to take care of her by providing a home,” Sarah said.
Her mother-in-law, 55, is going through a divorce and lost her job in September after a corporate restructuring. Right now she’s making DoorDash deliveries to bring in some extra cash.
She’s also apparently nearly $1 million in debt.
When Ramsey asked why her mother-in-law had so much debt, Sarah responded: “I don't ask questions.”
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Sarah says she adores her mother-in-law, but wants to know if this setup would be a wise decision and, if so, what they need to “have on paper.”
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Why this is unethical
Ramsey answered clearly: “I would not do this.”
He said, by doing so, “you are tying yourself to people you don’t ask questions about, permanently, and you are taking away her reasons for getting back on her own feet. This is not good. It is not healthy.”
He said Sarah’s mother-in-law needs to recover from the grief that comes from ending a marriage and experience “what's known as a life — not hiding at her son’s house from reality.”
Secondly, “the whole reason to do this is to deceive,” he said.
“Your grandmother-in-law is teaming up with her daughter and using you guys to deceive the people that she owes,” Ramsey said. “This is deception and I’m not going to participate in that. It’s a lack of integrity. It’s unethical.”
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Ramsey guessed the debt might belong to the mother-in-law’s ex-husband — perhaps unpaid IRS debt from a failed business venture. If so, it’s possible the mother-in-law had nothing to do with it, in which case she could potentially get rid of the debt using innocent spouse relief.
Innocent spouse relief can “relieve you from paying additional taxes if your spouse understated taxes due on your joint tax return and you didn't know about the errors,” according to the IRS.
“I got a feeling she didn’t buy purses to get to a million dollars,” Ramsey said.
If the mother-in-law qualifies for relief and grandma wants to give her daughter some money to clean up any debt that’s left over, “I got a feeling it’s not going to be that much,” Ramsey said.
He also believes this is a better option than buying a house under deceitful circumstances.
“That would be the ethical thing,” he said. “Try to settle it.”
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Vawn Himmelsbach is a veteran journalist who has been covering tech, business, finance and travel for the past three decades. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, Metro News, Canadian Geographic, Zoomer, CAA Magazine, Travelweek, Explore Magazine, Flare and Consumer Reports, to name a few.
