When individuals are in the middle of their divorce proceedings, filing taxes may be the last thing on their minds. However, many who are in the midst of a legal divorce may have similar concerns when it comes to how they file their taxes. Do I file jointly or separately from my spouse? If we file jointly, how should the refund be paid to each party?
When individuals are in the middle of their divorce proceedings, filing taxes may be the last thing on their minds. However, many who are in the midst of a legal divorce may have similar concerns when it comes to how they file their taxes. Do I file jointly or separately from my spouse? If we file jointly, how should the refund be paid to each party?
If you’re in the middle of a divorce but are still legally married by December 31, you can file a joint tax return so long as both parties agree. Even if you are legally separated, you are considered to be “married.” If there was no final court order ending a “marital status,” you are technically married for the purpose of filing a tax return and may check off “married filing jointly.” However, if a judgment was made by the court ending the marriage as of December 31, you cannot file jointly. You would have to file as either “single” or “head of household.”
There are pros and cons to a joint tax return, which is why it should be discussed with an attorney and accountant. Some pros of filing jointly may include a lower tax burden, while a disadvantage to filing a joint tax return is that spouses are then jointly and severally liable. When negotiating a marital settlement agreement or judgment, or a separation agreement, it is imperative that tax liability and refunds are discussed within the document.
The document should provide details regarding how the refund should be paid. It should include information about whether the refund is to be paid by check or direct deposit. If the refund is paid by check, then it should contain both names, unless the agreement states that one spouse will pay the other spouse their portion of the tax return within a timely manner.
If you are filing jointly and one spouse is responsible for preparing the returns it is reasonable for the other spouse to request an indemnification agreement. This signed agreement relieves the spouse who did not prepare the returns from being liable for amounts due if the spouse preparing the returns did not prepare them accurately. It is worth mentioning that tax liability and refunds do not have to be shared equally. Commonly, a ratio based approach is used per each spouse’s income to help determine tax liability and refunds.
When negotiating a marital settlement or separation agreement, there are a lot of financial considerations and tax issues to be cognizant of. It is important to take the time to understand these issues. If you are getting divorced, contact the Suffolk County family law attorneys of Mcguire & Peláez, PC to assist you with these matters. Ms. Peláez has over 10 years of experience handling family law cases, and will fight for what you are entitled to. Contact our Long Island matrimonial law firm at (631) 348-1702.
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