Filing Taxes During a Divorce: Should we file taxes jointly or separately?

couple filing taxes during a divorce

Filing your tax return can be a cumbersome and confusing process, especially when you find yourself in the midst of a divorce. The decision of whether to file jointly or separately carries significant weight, impacting various aspects of your financial situation. To provide you with a clearer understanding, let's delve into the four most frequently asked questions we receive about filing taxes during a divorce. By addressing these questions, we aim to equip you with valuable insights and offer a few practical tips to help you navigate this challenging season with confidence and peace of mind.

4 Questions About Filing Taxes in the Middle of a Divorce

1. What filing status should we use in the middle of a divorce?

If your divorce is not finalized by December 31st, you still have the option to file your taxes as "married filing jointly" for that tax year. However, it is important to carefully consider various factors when determining what is truly best for your unique situation. If you find yourself in the midst of a divorce, I highly recommend seeking guidance from both a tax professional and an attorney who specializes in divorce cases. Their expertise will provide invaluable insights to help you navigate this complex process and make informed decisions regarding your taxes.

2. Why would parties file taxes as "married filed jointly" in the middle of a divorce?

In general, filing jointly may result in a lower tax bill and simplify the tax filing process. It allows both spouses to combine their incomes, deductions, and credits, potentially leading to greater tax benefits. However, it is important to note that both parties must agree to file jointly in order to do so. If either spouse is unwilling, then both individuals will have to file separate tax returns, which may affect their tax liability and potential deductions.

When going through the divorce process, if both parties choose to file taxes jointly, it is advisable to have a written agreement in place regarding how any tax refund or liability will be shared. This agreement can help ensure a fair distribution of assets and liabilities between the divorcing parties. In some cases, if there is no agreement, it is common for one of the attorneys involved to hold a refund check in their escrow account until an agreement is reached.

Taking the time to address tax implications and agreements during the divorce process can help minimize future disputes and provide clarity for both parties involved. It is always recommended to consult with a tax professional or attorney to understand the specific tax considerations and requirements in your situation.

3. Why would parties file taxes separately in the middle of a divorce?

In the majority of cases that we encounter, when parties opt to file their taxes separately, it's often due to being embroiled in a high-conflict divorce situation. The level of communication required to complete the filing process may actually incur higher costs than any potential tax savings that could be achieved by filing jointly.

Moreover, parties may also consider filing separately if they harbor concerns that their spouse has not been forthcoming with financial information, and they apprehensively anticipate an associated tax liability. By choosing the "Married filing separately" option, individuals may find themselves better protected from potential tax liabilities that may arise.

It is important to take into account these factors and carefully evaluate the financial implications and advantages of filing jointly or separately, depending on the specific circumstances of each case.

4. What if we file jointly, and I later find that my spouse did not disclose all of the information needed to file accurate returns?

Innocent spouse relief is an IRS procedure designed to provide financial relief to individuals who are unfairly burdened with additional tax, interest, and penalties due to their spouse or ex-spouse's improper income reporting, incorrect reporting of income, or erroneous tax deductions or credits. This relief option serves as a safeguard for innocent taxpayers who may have been unknowingly impacted by their partner's actions.

When applying for innocent spouse relief, it's important to note that the process can take up to six months to complete. During this time, the IRS carefully evaluates the circumstances of the case and reserves the right to approve or deny the relief request based on the information provided.

For more comprehensive information on innocent spouse relief, including eligibility criteria and the necessary steps to apply, you can refer to IRS Publication 971. This publication offers detailed insights and guidance to help individuals navigate the innocent spouse relief process successfully.

Ultimately, it's up to you and your spouse to determine how you want to file taxes if you're not yet divorced. A tax professional can tell you which filing status will save you the most in taxes, but that's not the only consideration.

Related post: A Checklist for Preparing to File Taxes After a Divorce


Additional Common Divorce-Related Tax Questions

Q: Are child support payments taxable?

A:  No, child support is not considered taxable income for the recipient and cannot be claimed as a deduction for the payer.

Q: Are alimony payments taxable?

A: For divorces that are finalized after December 31, 2018, alimony payments are not considered taxable income for the recipient, nor are they tax deductible for the payer at the federal level. However, some states do still consider alimony to be taxable to the recipient and tax deductible for the payer so be sure to check with your state.


About Intentional Divorce Solutions

At Intentional Divorce Solutions, our goal is to transform the divorce process into a journey of cooperation and respect, ensuring a healthier transition for everyone involved.

Our team provides comprehensive support and expertise in several key areas:

  • Divorce Financial Planning and Analysis: Providing in-depth financial insights and strategies for a secure future post-divorce.
  • Divorce Mediation: Facilitating respectful and balanced negotiations to reach mutually beneficial resolutions.
  • Divorce Coaching: Offering personalized support and guidance to help you navigate through emotional and practical challenges of divorce.
  • Divorce Support Groups: Creating a space for sharing experiences and finding strength in community support.

Please Note: We focus on providing support and solutions in various aspects of divorce. However, we are not attorneys and do not offer legal advice.

Work With Us

If you are on the journey of divorce and seeking professional, empathetic support, we are here to assist you. Reach out to us to discover how our services can be adapted to your unique needs, empowering you to make informed decisions for respectful and positive outcomes.

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