Hafemeyer Law

Filing Taxes in the Midst of Divorce or Separation

Like most major life changes, divorce does not follow a calendar. So at the end of the year determining your tax filing status may not be clear cut if you are in the midst of a divorce or separation.

First, it is important to understand whether the divorce is final or in process. The legal undoing of the marriage is at the time that the judgment and decree is issued by the court and filed – when you have a divorce decree signed by a judge.  If the divorce is not final by December 31, both parties must file as married.

The following are some guidelines from the IRS regarding the definitions and requirements for filing statuses:

Married Filing Jointly

If at the end of the calendar year the divorce is not final, it may be in the best interest of both parties to file married filing
jointly. IRS rules allow in most situations for this filing status. One of the main advantages to this filing status is the increase in allowable deductions, including the child care credit and earned income credit.

Also, the tax owed for married couples filing jointly is lower. In many circumstances, this will allow a greater refund for both parties then if filing married filing separately.  However, it does require the parties to work together to gather all the receipts and documents required.

Married Filing Separately

When an individual files married separately, there is a significant reduction in the allowable deductions. For example, in most cases the child care tax credit and earned income credit cannot be taken when filing separately and the tax table is higher.

However, if the parties cannot agree on filing and working together to file, a tax return this may be the best option.

Head of Household

Head of household is an option that is not as widely understood. There are several requirements to qualify for this filing status under the IRS guidelines. Some of these guidelines are that the individual who is filing:

  • Must have been separated from their spouse for the last 6 months of the calendar year
  • Must have paid more than half of the household expenses
  • Must have a qualifying dependent – typically a child

This tax filing status may increase the amount of allowable deductions and decrease the tax that is owed. It is important to always consult a tax advisor prior to determining the tax filing status that makes the most sense for any particular situation, but it is important to understand that there are options that may decrease a tax burden.

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