Filing Tax Returns During Divorce: Joint or Separate?

Individual income tax return form, glasses, pen and calculator on desk

Tax season is here. You’re looking backwards over the past year trying to figure out how much you owe the government and how to take advantage of as many deductions as possible. If you’re in the process of deducting your spouse from your life, it can raise a lot of questions that can complicate your returns.

Perhaps the most fundamental tax question if you are in the process of a divorce is whether to file your return jointly with your spouse or separately.

As a preliminary matter, you can still file a joint return during a divorce so long as you are still legally marriage at the end of the tax year - that is, the judgment of divorce was not entered.. Of course, both parties would have to agree to file jointly.

Married couples filing jointly usually (but not always) pay less than they would if they file separately. But a joint filing for a divorcing couple can have downsides.

Filing jointly means that both spouses are jointly and severally liable for any taxes that may be owed to Uncle Sam. If the spouse who prepares the return claims improper deductions, fails to report income, or otherwise adds to the couple’s tax liability, the IRS can come after either spouse regardless of whether or not they played any role in the return’s preparation.

If a divorcing couple wants to retain the advantages of filing jointly while insulating themselves from shouldering a disproportionate or unfair amount of any liabilities, they should enter into a written agreement that specifically addresses and provides for indemnification for any such liabilities. The parties should also reach an agreement as to the allocation of any refund that may be forthcoming.

While a court cannot require a party to file a joint return,  the failure to sign a joint return that results in a higher tax liability constitutes marital waste and could impact equitable distribution of marital property.

As with any tax issue, you should always consult with a tax professional who can advise you on the best course of action for your specific circumstances.

At Clement Law, we provide trusted counsel and effective advocacy to individuals in New York and New Jersey going through the transition of divorce. While thorough and aggressive, we help clients resolve their cases in novel and creative ways in order to minimize strife and reach a positive resolution. If you’d like to discuss any issues relating to divorce, please give us a call at (212) 683-9551 or fill out our online form to arrange for a consultation. We look forward to assisting you.

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