By its very nature, divorce is an ugly affair and takes its toll on both parties involved. Everything is thrown into disarray and it often feels as if you need to start from scratch. To make matters worse, you still need to file your taxes which is a nightmare without the added pressure of an pending divorce. There are a number of questions that you need to answer before you can file your taxes and it will involve both parties to work together to make the best of the situation. This is often where things get difficult.
Things to consider
As long as you were married for the entire prior year, you could file your taxes as if you were still married, but when you are in the middle of the divorce, things get more complicated. If at all possible, it is advisable for the two parties to agree on how to file their taxes. However, when the two parties cannot come to an agreement, guidance from the court is the next best option.
If you have a status conference somewhere between the beginning of the year and the filing deadline, you could ask the judge if he or she has any general guidance on the matter. Generally, the judge would rule that the taxes should be filed as to the benefit of both parties. That gives you a platform and radar to work with. This means that if a filing method is not in the best interest of both parties, it cannot be considered.
Role of the CPA
Getting a CPA to intervene at this stage is highly advisable. Various scenarios could be run on both individual filing and joint fling to determine which method would be the best. To illustrate, if the scenarios show that when individual filing is done, one party will receive a $4000 refund and the other party would owe $1000 as opposed to a joint refund of $2000 when joint filing is done, then the latter option would be considered beneficial to both parties. When you are concerned that the other party is not honest about their tax returns, it is advisable to request that taxes be filed separately. This will protect you against liability for their taxes. However, you need to be confident in your suspicions or the decision to file separately could cause more harm than good.
Initial agreement is just a beginning
Reaching the initial agreement is only the beginning though. In the case where you agree to file separately, you still need to agree on who will claim what. The most common issues are the decisions around children, mortgage interest deductions and charitable donations, especially when a business is involved. You might be tempted to jump the gun and claim all the deductions, but that would be seen in a bad light by the court and you could be asked to amend your claim.
Let the experts help you out
Outside advice from the experts is always a good idea. Visit Crosscor’s website or call them on 949.264.1455 to find out more and get solid advice from guys who have seen it all. If you aren’t sure whether they can assist you, contact them by clicking on the following link: https://crosscor.com/contact/