Today's article is brought to you by Tara R. Blazina, CPA with Kemper CPA Group. We routinely consult with Tara and others at Kemper on tax, financial and business valuation matters.
Filing status is determined on the last day of the tax year (usually December 31). A couple who has not obtained a final decree of divorce or separation by the last day of the tax year is considered married for tax purposes. There are five filing statuses, only four of which pertain to parties who are divorced or in the process of getting a divorce. Individuals who are deemed married can file as married filing jointly, married filing separately or as head of household (if certain qualifications are met). An unmarried individual may file as single or head of household.
Often times, married filing jointly will create a lower tax liability. However, both you and your spouse are jointly and severally liable for the tax liability. Married filing separately allows you and your spouse to only be liable for the tax reported on your separate tax returns, but may create a higher tax liability. Your tax preparer should be able to calculate both married filing jointly and married filing separate to identify the advantages and disadvantages of both filing statuses so that you may make the best decisions for your situation.
If you file married filing separately, you and your spouse may amend the return to change to married filing jointly for up to 3 years after the due date of the return (not the extended due date) However, if you file married filing jointly you may not subsequently amend the return to file married filing separately; except in the event of a death of either the taxpayer or the spouse. A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. The personal representative has 1 year from the due date(including extensions) of the joint return to make the change. [IRS Publication 504]
In order for a married individual to file a head of household, they must be deemed an “abandoned spouse”. All of the following qualifications must be met to be considered an abandoned spouse.
- The individual pays more than half the cost of maintaining his or her household for the taxable year.
- The individual files a separate tax return.
- The individual’s household is the principal home of a dependent child for more than six months of the year (this condition is met if the tax payer is entitled to claim the dependency exemption for the child, even if they do not claim the deduction).
- The individual lives apart from their spouse for the last months of the year.
There are many facets of a divorce that can impact your tax return. It is important to discuss all options with your tax preparer and be aware of the tax impacts of your decisions.
Note: This information is general in nature and should not be construed as tax advice. You should always work with your attorney or tax professional to determine the tax advantages that will best fit for individual situation.
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