"But it's not tax season" may seem like a logical argument for ignoring the logistics of filing your income tax returns after separation from your spouse, especially when April 15th is still four months away. However, it is prime time to start making decisions regarding your 2012 tax filings. During the marriage and before separation, the decision to file married filing jointly was likely an easy one. Now that you are in the process of a divorce, that decision will not be as simple.
During the divorce process you have options as to your tax filing status. You can file married, married filing separately, or you may qualify to file as head of household if you meet certain criteria. Bear in mind that if you file jointly, any spousal support or alimony pendente lite paid from one spouse to the other will not be reported for tax purposes. Therefore, the payor cannot deduct these payments from his income and the recipient will not include such payments in her income. Of course, if you are still married, you cannot file single. If either party has concerns as to unreported income, you should consider filing in a manner other than "married." Your accountant will be able to discuss your options as well as the benefits and drawbacks of each filing status.
If you decide not to file a joint tax return, you must still make several other decisions regarding your tax filing. Who will claim the children as dependents? Unless there is an agreement to the contrary, the parent with the most overnights with the children during the calendar year has the right to claim the children as dependents for tax purposes. However, for certain financial reasons, it may make more sense for the partial physical custodian to claim at least one child as dependent for tax purposes. Who will claim the deductions? There may be mortgage deductions and charitable contributions, among other deductions, which you must determine how to divide in the event you file separate tax returns. Who will claim the interest and dividend income? This may be divided in some proportion or one party may end up reporting all of the interest and dividend income.Â However you decide to file, it is important that you and your spouse file consistent returns with regard to deductions, dependents and income. If you fail to file consistent returns, both parties risk being audited by the taxing authorities.
Whether you anticipate resolving these tax issues with your spouse or you think that reaching an agreement will be difficult, you must start the conversation now so that you are ready to file your taxes by April 15th. If you have any concerns, you should contact one of the attorneys at Williams Family Law to further discuss your tax filing issues.