Taxes

Whether it’s time to file estimated taxes on January 15 or you’re looking ahead to the big day in April, how you file your taxes can have big implications.  Once your divorce is finalized, you will have the option of filing as married or separately for the previous year in which you were married.  It is strongly advised to contact a highly qualified CPA to assess whether it would be to your benefit to file a joint or solo return.  This could be the difference in a large refund or owing money to the government.  You’ll want all of this spelled out in your decree, because as we know, exes can be fickle.  Keep in mind too, that you’ll want to spell out in writing how you and your ex will split a potential refund. Most agree that 50/50 is fair.  However, if your incomes vastly differ or one person contributes more to your scheduled itemizations, you may have an argument for receiving a larger portion.  And while it may seem silly now, it’s a good idea to decide beforehand to whom that potential check will be mailed, if filing jointly.  Also, outline how long the receiving spouse has to divide up any returned funds.  You don’t want your ex receiving the refund check and then having the option to hold on to your portion for 6 months.  Depending on how amicably you and your ex get along, you may even want your attorneys to hash out which CPA you’ll use.

What if you have kids? Will this truly muddy the waters?  Well the answer to that depends.  The big item for contention will come down to who gets to file the kids as dependents.  I’ve seen couples work this out in many different ways.  You may agree alternating years or each filing one child.  However, what you don’t want to do is grant your ex the ability to file the children as dependents every year.  Especially if you are the non-custodial parent, allowing your ex to file the dependency every year means you will be responsible for many childcare expenses without the potential luxury of a tax credit.  Your only option is to have your ex sign a Form 8332 (https://www.irs.gov/pub/irs-pdf/f8332.pdf) granting you this option.  Keep in mind, this form is only valid for one year.  What you should always remember is that you will be filing your divorce decree in a state court, but taxes are collected federally.  For the purpose of this discussion I’ve left out states that collect their own income taxes.  But in summary, what the IRS wants to collect will always supersede what’s in a decree, and it’s better to contact a CPA sooner than later.

taxes

Calculate what you may owe here:

http://www.moneychimp.com/features/tax_calculator.htm

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