Determine Your Filing Status
The first (and most important) step of filing taxes during a pending divorce is to properly determine your filing status.
• Married Filing Joint – If you and your ex were married as of the end of the tax year (December 31st), you may file a joint return (i.e., “married filing jointly”). Note, if you were married as of the end of the tax year, it doesn’t matter whether you and your ex lived together or not. Being legally married is the only requirement. The standard deduction for the married filing jointly in 2021 is $25,100. However, you and your ex should agree (in writing) before checking this filing status on your return. Additionally, make sure you have considered the potential disadvantages of filing a joint return with your ex. For example, if you file jointly then both spouses are jointly and severally liable for taxes on the return, including any tax deficiencies, interest, and penalties.
• Married Filing Separate – If you were still married as of the end of the year but do not want to file jointly with your ex, you can file as “married filing separately”. For the most part, married filing separately is similar to filing individually. The standard deduction for married filing separately in 2021 is $12,550.
• Head of Household – You may file as “head of household” even if you and your ex were still legally married at the end of the tax year. Generally, you will pay less tax under the head of household filing status than either married filing jointly or married filing separately. For example, the standard deduction for the head of household in 2021 is $18,800. However, you must meet the following criteria:
o You paid more than half of the cost of keeping up your house during the tax year. Relevant expenses include rent/mortgage, taxes, homeowners’ insurance, utilities, etc.
o You have not lived with your spouse during the last 6 months of the year.
o You maintained your house for more than half of the year for a dependent child.
Note, if you have more than one dependent, you and your ex can both file head of household as long as you do not each claim the same dependent(s). So, if you have two children, you each can claim one. You should coordinate with your ex and agree (in writing) before using this filing status.
Determine Who Will Claim the Kids
You and your ex cannot claim the same children as dependents. The IRS only allows one dependency exemption per child. Generally, the custodial parent (the parent with custody for the greater part of the tax year) claims the dependency exemption as well as the Child Tax Credit for the qualifying child. In the event custody is an exact 50/50 split, the IRS has a custody tiebreaker rule to determine which parent gets to claim the exemption.
For further discussion of the filing taxes as a divorced or separated individual, see IRS publication 504. If you have any questions about filing taxes or your divorce, do not hesitate to contact McNeelyLaw’s team of tax attorneys and family law attorneys today.
This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.