Tax filing while Divorce in process

[chiga]

What is the name of your state? California

My divorce is in process and we used to do taxes jointly. Now I am wondering if filing jointly would be of any benefit in terms of tax refunds when we both are working with a child living with my spouse. Please provide some inputs around this.

 

[Zigner]

What is the name of your state? California

My divorce is in process and we used to do taxes jointly. Now I am wondering if filing jointly would be of any benefit in terms of tax refunds when we both are working with a child living with my spouse. Please provide some inputs around this.

Generally (but, by no means always), you will be better off filing jointly. With that said, you need to review your specific situation with a tax pro for guidance. There's no way anyone on this forum can give you anything other than general information in response to such a broad question.

 

[Taxing Matters]

What is the name of your state? California

My divorce is in process and we used to do taxes jointly. Now I am wondering if filing jointly would be of any benefit in terms of tax refunds when we both are working with a child living with my spouse. Please provide some inputs around this.

For most people in the middle of a divorce filing jointly as they did in the past is typically going to result in the least tax to pay when compared to the total tax on two separate returns added together. But the only way to know for sure for any given year of marriage (whether or not a divorce is in the works) is to run the numbers both ways and see what result you get. That needs to be done for both federal and state tax returns. In some states, the state tax result may make enough of a difference to determine which way to go.

The biggest problem I see with joint returns with divorcing couples is when they argue over how much each has to contribute if there is tax due or, if there is a refund, how to split up the refund. Depending on where you are in the divorce process and what orders the court has issued it may be that the judge will decide the matter.

Because you reside in a community property state, separate returns still require a significant exchange of financial information because much of the income you each have is likely community income, and when filing separately you each have to report your half of the community income on your separate return. This fact also means that there is less incentive for one spouse, e.g. a nonworking spouse, to refuse to join in a joint return and instead file separately. In states without community property, it's possible that one spouse would benefit significantly from filing separately at the cost of dumping a large tax burden on the other spouse. When they can't agree on how to file the return, then the judge will have to decide that. Bear in mind that if you can't agree on this stuff and it does go to court, there is a cost to that in attorneys fees, filing fees, etc which leaves you each with less benefit than if you can work it out amicably.

 

[LdiJ]

One thing that is a little bit helpful these days in regards to fighting over refunds when the couple is divorcing, is that the IRS now allows a direct deposit of a refund to be split between multiple accounts. So, if a divorcing couple could at least momentarily agree how the refund was to be split and submitted the return to the IRS split between their respective bank accounts based on their agreement, it would at least prevent an ongoing battle over the refund, and/or prevent the person to whose account the refund was deposited from stiffing the other party.

 

[Bali Hai Again]

What is the name of your state? California

My divorce is in process and we used to do taxes jointly. Now I am wondering if filing jointly would be of any benefit in terms of tax refunds when we both are working with a child living with my spouse. Please provide some inputs around this.

My advice: Eliminate “tax refunds” from your future tax planning. If push comes to shove, one of you may be entitled to file Head of Household for 2023. You might look into that and see if that applies. It sounds like this might apply to your spouse which would force you to file Single. In other words if you cause a fight over the filing and refund, you may be the one holding the empty bag.

 

[Taxing Matters]

It sounds like this might apply to your spouse which would force you to file Single.

No. If one spouse meets the requirements for head of household for the year, that does not result in the other spouse filing as single, unless the other spouse was either not married on the last day of the tax year (in which case joint filing isn't an option anyway) or the spouse is considered as unmarried for federal income tax purposes as of the last day of the year. What the other spouse would have to do is file as married filing separately. That is pretty much always going to be worse than filing as single. The IRS guide to filing status for VITA volunteers provides a pretty clear explanation for determining a taxpayer's correct filing status.

 

[Bali Hai Again]

No. If one spouse meets the requirements for head of household for the year, that does not result in the other spouse filing as single, unless the other spouse was either not married on the last day of the tax year (in which case joint filing isn't an option anyway) or the spouse is considered as unmarried for federal income tax purposes as of the last day of the year. What the other spouse would have to do is file as married filing separately. That is pretty much always going to be worse than filing as single. The IRS guide to filing status for VITA volunteers provides a pretty clear explanation for determining a taxpayer's correct filing status.

Thank you for clearing that up TM. Years ago I filed Head of Household because my ex refused to file a joint return and it’s good to know all these years later that she did more damage to herself than I thought!!