With the start of a new year, many people will begin thinking about the annual dreaded tax deadline looming in April. If you are in the midst of a separation or divorce, taxes can be even more complicated, as many issues can arise. The following are only some considerations that may need to be addressed regarding taxes for divorcing couples.
Should You File Jointly or Separately?
Even if you still must file as “married,” you and your spouse still have the option of filing jointly or filing separately. Since filing together may seem less than desirable since it requires you to work together, many couples may be initially inclined to file separately, especially in contentious situations. However, there are some drawbacks to filing separately while you are married, including the following:
- The IRS applies a higher tax rate to married couples filing separately;
- Couples must divide up deductions such as mortgage interest or charitable donations;
- Both individuals must either claim the standard deduction or itemize their deductions and the same approach may not be beneficial for both.
Despite the possible drawbacks, in some situations, filing separately may be beneficial. This may be the case if your spouse will have a higher tax liability than you will or if you are paying spousal support during the separation.
Considering Taxes In Property Division
You must also consider how taxes will affect the equitable distribution of property in a divorce. For example, when determining the value of a piece of real estate or a business, you should consider how much tax liability will come with keeping the property and factor that into the valuation analysis.
Deciding Future Head of Household Status
If you have at least one child or dependent and they live with you at least half of the year, you can often enjoy a lower tax rate by claiming “head of household” status. Two parents cannot both claim the child as a dependent or use the child to qualify as a head of household, however. In some situations, it may be clear who gets to claim the child on their taxes. If you have joint physical custody, it may be more difficult to determine who can rightfully claim head of household. If you and your spouse cannot agree, it may be important to keep a log of the days the child spent with each parent in order to support your claim of the child on your taxes.
What if Your Spouse Cheated on His or Her Taxes?
Divorce requires full financial disclosure from both parties. During such disclosure, some people learn that their spouse has submitted false information or otherwise fraudulent tax returns in order to avoid tax liability. If you did not know about the tax fraud, you may qualify for Innocent Spouse Relief from the IRS. This can help you avoid tax liability for your spouse’s actions and can prevent prosecution for tax fraud.
An experienced Boca Raton divorce attorney can help you identify any possible tax issues in your divorce and can help provide resources with which to deal with these issues. If you are getting divorced, call the office of family law attorney Alan R. Burton at 954-229-1660 today.
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