Tax Filing When Going Through Divorce

California Divorce Attorney

California Divorce Attorney Explains What To Consider For Tax Filing When Going Through Divorce

Going through a divorce can be an extremely emotionally and stressful life changing event. With all the different factors and people involved, it can be overwhelming to know how to begin and what you should know. One of the most difficult tasks to take care of are dividing up the assets and if you and your spouse are not on speaking terms, things could get complicated, especially as it pertains to taxes. If you’re going through a divorce, consider consulting a California divorce attorney who can explain the various tax elements to consider and avoid any post-divorce tax surprises.

There are a few basic ways taxes have an impact on your divorce in California. Your filing status is one of the most important ones to consider because it is used for many things on your tax return such as deductions and credits. When determining your filing status, you must take into account your marital status on the last day of the year. So if you were still married on December 31st, you are must file as either married filing jointly or married filing separately. When filing jointly, you both must include all your income, exemptions, deductions and credits. You are not required to live together to file jointly so long as you are still legally married. And because of that, if you have suspicion or question whether your spouse is reporting all income, you must contact a California divorce attorney because you could be held liable for all taxes due as well as penalties and interest.

If you choose to file separate even if you are legally married, you only have to report your income, exemptions, deductions and credits. But it’s important to keep in mind that filing separate doesn’t necessarily work to lower the family tax bill. There are some disadvantages to this filing status:

  • Both husband and wife must either itemize or use the standard deduction
  • You can no longer take any relevant exclusions, credits or deductions for adoption or education expenses
  • Various exclusion and exemption amounts will be cut for child and dependent care expenses, employer dependent care assistance, and alternative minimum tax

If you are legally divorced or your decree of dissolution of marriage is entered before the last day of the tax year, you could qualify to file as “head of household”. If you have not met the date requirement, you may still be eligible if you physically did not live with your spouse for the last 6 months of the year. Another requirement is that you paid more than 50% of the upkeep of your home and you have had at least one child in your care for over 50% of the time. The benefits of filing under this status is that you don’t have the joint liability. Additionally, the exemptions, credits and deductions are not as limited as filing under married status. When one spouse files as head of household, the other spouse must file “married filing separate”. The various rules and exemptions can get complicated so it’s best to contact a California divorce attorney for legal assistance.

If your final decree of dissolution of marriage or legal separation was entered by December 31st, you could file as single. Knowing the benefits of the various filing status is a crucial step in planning a divorce. Having a trusted California divorce attorney by your side could make all the difference on your tax returns.

Speak to a California Divorce Attorney For Your Divorce Needs

The decisions you make in a divorce can affect your and your family for the rest of your life. At Drury Pullen, we take that seriously and dedicate our skills, resources and experiences to ensure you get the best results for your future. Give us a call at (805) 879-7523 to speak to a California divorce attorney today.

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