Tax Issues for Divorcing Spouses to Look Into

Mandi Woodruff at the Business Insider provides the following tips for divorcing spouses:

Procrastinating. If you’re newly divorced and haven’t filed taxes as you read this article, you might want to get a move on it. First of all, there’s no telling how willing your ex will be to fork over his or her tax records, which could throw a major roadblock in your way. And if you’re relying on a CPA or tax preparer to play mediator, chances are high they’ll be too swamped this late in the season to field your last-minute questions.

Setting yourself up for liability by filing jointly. Every couple has to decide whether to file as married (joint) or married (filing separately) after a divorce. There’s a big difference here, which is that filing jointly means you’re on the hook if your ex winds up in tax trouble. “You’re liable for everything on the tax return even if it’s related to your spouse,” Mindel says.

Note: When it doubt, file separately. You can change your filing status to joint after the fact, but a joint return can never be amended once it’s filed.

Bring on the bills. Sometimes couples file jointly just because it’s far more expensive to prepare two separate returns–especially when CPAs and tax preparers come into play. Often, preparers will draw up a joint and separate return to compare the cost of each. “It’s not uncommon for two tax returns to cost a couple thousand dollars more,” Mindel says.

Claiming Head of household. When children are involved, deciding who’s able to claim Head of Household status in order to get the dependency deduction is a matter of simple math. By default, it goes to the parent who has custody more than 50 percent of the year. If both spouses try to file as HOH, that’s as good as rolling out the welcome mat to IRS auditors.

Tip: If there are multiple children, you can game the system a bit and agree to divvy up dependents on your returns (ex: if a couple has two children, they’d agree to claim one each).

Standard dependency. This is the other half of the child deduction and can be tricky because one spouse can agree to “give” the dependency standard deduction to the other. For that to work, he or she has to file an IRS form 83-82, sign it and give it to their ex every year.

Spousal support. Spousal support is most often tax deductible for the person paying and counts as added income for the benefactor. There’s a chance to negotiate nontaxable spousal support during the divorce proceedings.

Choosing where to file. In a perfect world, divorced couples would either sit down and bang out their taxes together or agree to use the same tax preparer. That way, the middleman would be familiar with both sides and they’d ensure your returns match up to pass muster with the IRS.

“The worst thing is to have the IRS come in and have both (parties) pointing the finger,” Mindel says. “In that scenario the only one making any money is the IRS.”

Please note that The Law Firm of Adam B. Cordover, P.A., practices family law and does not provide tax advice.   Nothing on this website or in the accounting practice of The Law Firm of Adam B. Cordover, P.A., should not be construed as tax advice.

However, if you are looking to retain a Florida Divorce Attorney and wish to schedule a consultation with a Tampa Bay Divorce Law Firm, contact The Law Firm of Adam B. Cordover, P.A., at 813-443-03615 or by filling out our online form.