Tax season is here, which leaves many couples who are in the middle of getting a divorce in a frenzy, as they have no clue what they need to do about their tax return. While some splits are amicable, there are plenty that are not. However, tax season is a time when you both need to put aside all of your differences, sit down, and talk about your finances to work out how to move forward in a way that will benefit both of you and your family in the best possible way. Here are some common questions that you will need to answer:
#1: Should You File Jointly, Separately (Still Married), or Individually?
It is required by law that you file according to your marital status at the end of the year – either married or single. In some cases, couples may decide to wait until after the first of the year to finalize their divorce in order to reap the benefits of filing a joint return. If this is the case, make sure that an official agreement has been made ahead of time in regard to what will be done with the deficiency or refund.
If you do not hold off on the divorce, yet you are still legally married, you will need to decide if you will file jointly or married filing separately. If there are issues about one spouse withholding income, it may be a good to file separately.
#2: Which Spouse Will Claim the Children?
Unless an agreement has been made or the divorce decrement states otherwise, the primary custodial parent will have the right to claim the children on the tax return each year. If your divorce has not been finalized, you should both come to an agreement as to how this should be handled. In most circumstances, the best settlement is split the exemptions.
#3: How Should Assets Be Divided?
Asset division is complicated all on its own, but it can be even more so during tax time. If you are already divorced, how your assets will be divided will be in your divorce decree. So, make sure to reference your court order to determine how your deductions should be divided. If you are in the middle of a divorce, this is something that you will need to iron out.
As a general rule, if there is one spouse that will be retaining the home, such as buying the other spouse out, then they will be the one entitled to the mortgage deduction. Now, if the home is being sold, then the deduction can be split down the middle between both spouses. The same is true – and far easier – of all deductions if you are in the middle of the divorce.
Like your divorce, your tax situation is unique so you may want to consider reaching out to a tax professional as well as an attorney, such as Meg Razi Attorney, before simply deciding what to do on your own.