Should I File a Joint Tax Return with My Spouse During Divorce?
Tax season can be a particularly stressful time, especially for those individuals going through a divorce. Below, we'll break down the considerations which might help guide your decision of whether to file a joint tax return with your spouse.
At the end of the tax year, your marital status determines how you
should file your federal income tax return. If you are divorced at any point
during the year, including on December 31, you are considered single for tax
purposes. However, if you are still legally married at the end of the year, you
have two options: filing jointly or filing separately under the "married
filing separately" status.
Benefits of Filing Jointly
Despite the emotional and financial complications which come with divorce, many couples choose to file jointly because it offers more tax benefits. Filing jointly typically results in a lower overall tax liability compared to filing separately. Additionally, couples who file jointly can claim several key tax benefits unavailable to those filing separately. Additionally, couples who file jointly can claim several key tax benefits unavailable to those filing separately, such as:
·
Tuition
and fees deduction
·
Student
loan interest deduction
·
Tax-free
exclusion of U.S. bond interest
·
Tax-free
exclusion of Social Security benefits
·
Child
and Dependent Care Credit
·
Earned
Income Credit
·
Educational
tax credits (Hope or Lifetime Learning)
Joint Liability
Tax benefits make filing jointly an attractive option, but joint tax returns come with joint liability. This means both spouses
are responsible for the accuracy of the return and any taxes owed.
While filing jointly may save money on taxes, it also carries the risk of joint liability. If there is an error on the return, both spouses are equally responsible for correcting it and paying any additional taxes owed. In cases where one spouse refuses to sign the joint return, you may still file it if there is evidence of intent to file jointly. However, the refusal could complicate matters and may require legal or tax advice.
Even if both spouses sign a joint return, the IRS provides some relief options for joint liability under specific circumstances. The three main forms of relief are: Innocent Spouse Relief, Separation of Liability Relief, and Equitable Relief. These relief options can reduce or eliminate liability for one spouse, but they have specific requirements and deadlines, so consulting with a tax professional is crucial.
Tax Refunds and Ownership
Another potential complication of filing jointly is the issue of
tax refunds. If a refund is issued, it is generally credited to both parties.
However, the ownership of the refund depends on the source of the overpayment.
If one spouse feels entitled to a larger portion, they may need to contact the
IRS to resolve the issue, especially if the overpayment was made primarily by
one spouse's income.
Consult with Professionals
If you're going through a divorce and are unsure about whether to
file jointly, it's crucial to seek professional guidance. A divorce attorney
can offer advice on whether you should file jointly, especially if there are
concerns about intentional errors on the return. Additionally, a qualified CPA
or financial planner can help you navigate the complexities of tax filings,
including potential property division and the tax implications of dividing
assets.
Whether you should file jointly with your spouse during divorce
depends on various factors, including your marital status, potential tax
savings, and the risks involved with joint liability. Given the complexity of
tax laws, it's wise to consult with professionals to ensure that you're making
the best decision for your financial future during and after divorce.