Filing a Joint Tax Return After Separation: What’s Best for Your Family?
Parties who have separated and begun the process of divorce may still file their taxes jointly if they have not received a Divorce Decree by December 31 of a given year. In many instances, a couple’s respective tax burdens will be lessened by filing a joint return. Even in the most contentious of divorces, the financial advantages of doing so can motivate parties to file their taxes jointly. In order to determine which filing status would be most advantageous to you, you should discuss the financial pros and cons of filing jointly with a tax advisor. Before making your decision however, it’s important to consider whether filing a joint return with your ex will carry any implications related to your divorce proceeding.
One potential down-side to filing a joint return with your ex is that it could preclude you from disputing his or her income later on in the arena of child/spousal support. When parties file their tax return jointly they are essentially representing to the IRS that the income information being provided is, to the best of their knowledge, accurate. If one spouse believes that the other is under-reporting their annual income for the purpose of lowering their support obligation, they may have a hard time making their case if they have already affirmed the other spouse’s reported income by signing off on a joint return.
Another factor worth considering beforehand is how best to allocate any refunds or deficits that will result from your tax filing. If your spouse has been under-withholding his taxes throughout the year, you may be signing up for an unforeseen tax liability by filing a joint return. You should consult with a tax advisor to figure out what your tax refund or liability would be if you were each to file separately, and use that information to help decide how best to allocate your joint liability or refund. Whatever you decide, it’s imperative that you have a signed agreement in place before filing jointly. One straightforward and common method used is to calculate each spouse’s tax liability in accordance with their income ratio. Again, consulting with a tax advisor will give you the tools needed to make an informed decision on what’s best for you.
Finally, before filing a joint return with your ex-spouse, you need to consider whether you trust him or her to report income and deductions honestly and competently. If you have any concerns about your ex’s ability to file an accurate return you should seriously reconsider filing jointly. A dishonest or inaccurate tax return can lead to an IRS audit, or even an unforeseen tax liability down the road.
Filing a joint return can only be done by agreement of both parties. Where one spouse is unwilling to file a joint return, the Courts will not step in and force parties to file jointly. If you are separated by did not receive your final Decree in Divorce by December 31 of last year, consult with a tax advisor to determine the best financial scenario for your family. Additionally, consult with a family law attorney to inform yourself of the implications you may face down the road as a result of filing a joint return.
To schedule an appointment with one of our attorneys or for further information, call us at LaMonaca Law, at (610) 892-3877