It is the beginning of a new year and before you know it, your income taxes will be due. I do not offer tax advice when approached with tax questions, except to say, “You should discuss that with your tax advisor.” However, there are some things to consider from the family law perspective when it comes to filing taxes while separated from your spouse.
You will need to consider if you want file jointly or separately. If you are still legally married as of December 31st of the tax year, you will need to decide whether to file jointly, married filing separately or head of household. To make an informed decision about your filing status, you will need to consult your tax advisor and your spouse. In order to file jointly, you will need to communicate with your spouse and share information such as your Social Security Number, employment and income information (W-2s, 1099s, etc.) and possibly other relevant information. If this will not work in your particular situation, you may need to choose a different filing status.
If you have children together, you will need to decide who will claim your child(ren) as a dependent. The custodial parent will usually claim a dependent child on their tax return if filing separately. However, there are tax forms that can be completed to allow the custodial parent to relinquish that right to the non-custodial parent if that makes more sense. The IRS will most certainly ask questions if both parents claim the same child as a dependent.
Are you selling your marital home or other property as part of your divorce? Those sales can raise tax implications as well. Capital gains taxes and other issues can arise and would need to be addressed for the tax filing and possibly as part of the equitable distribution of assets and liabilities between the parties.
When you file, there may be taxes owed. You and your spouse must decide how those taxes will be paid. Perhaps you will pay them from marital funds or calculate each person’s tax liability and determine how much you should each contribute. Your tax advisor can help determine a fair way to handle the tax liability.
On the brighter side, perhaps there will be a joint tax refund. Who will receive those funds and how will you accomplish that distribution?
As part of the equitable distribution of assets and liabilities in your divorce action, you should address any unpaid tax liabilities. There should be a clear, enforceable agreement or a court order specifying how, when and by whom those taxes will be paid.
I will close by saying, “You should discuss tax questions with your tax advisor.”
If you live or work in the central Pennsylvania area, including Carlisle, Harrisburg, Hershey and surrounding communities and would like to discuss filing taxes during divorce proceedings, or any other family law or estate planning or administration issue, please contact me.