March and April are tough times for the newly separated
As if trying to crack the secrets of the 1040 wasn't hard enough, for women going through the tribulations of a divorce in the previous fiscal year, tax time could be emotionally taxing as well. Having to deal with a possible hostile spouse or even just answering questions about marital status can make an already stressful situation closer to unbearable. Well, we will try to answer a few questions in hopes of making the start of Spring a little easier on your mood.
What is my marital status? The first question is one of the more clear-cut to answer. Your status is what you were on the last day of the year. Obviously, if you were still married on December 31st, then you are legally married. However, if you divorced your spouse on the 31st, then your tax status is divorced for the entire previous year. Couples that are separated are in a trickier situation. Their status depends on the state they reside in, and their rules regarding separated couples.
If I am divorced, how do I file? By law, you must file either "single" or "head of household."
What are the requirements for me being a head of the household? Being a head of the household brings a lower tax burden, but for you to qualify (instead of having to check "single"), the following criteria has to be met: you have to be not living with your ex-spouse for at least the last six months of the year; have a child you are taking care of, whether or not you list them as a dependent; provide more than half the household income; be a US citizen or resident alien for the entire tax year.
If we are still married in the eyes of the IRS, how should I file? It may depend on how comfortable you are with dealing with your ex-spouse. If you file separately, you will not be held accountable for his tax return. However, if you go this route instead of filing jointly as a married couple, you could lose out on major tax deductions. It depends on a variety of factors that you should discuss with a tax preparer.
What if there is money owed back to us? What if we owe? If the IRS deems there is to be a refund on your taxes, then you should discuss with your lawyer about the amount being treated as a marital asset when deciding the final outcome of your divorce proceedings.
If there is an amount owed, the most prudent route would be to have an independent tax advisor determine the main reason for the balance and the proper breakdown for repayment.
Of course, this is just the tip of the iceberg when it comes to tax questions and their ramifications on your recent divorce. It's best to discuss any and all of these questions with lawyers and tax advisors to make sure all your assets are protected from the government or your ex-spouse.