April 18, 2017 is the 2016 tax filing deadline and it’s quickly approaching. The Government does not care that you are going through potentially the most difficult time period in your life. Like the Godfather, the IRS wants its money. It does not want to hear excuses. It does not want to hear that you always filed jointly and now your soon-to-be ex-spouse will not sign the joint return, or provide their W-2, or disclose the income of the closely held business because they fear it will be used against them in the divorce process.
Filing your taxes can be difficult, especially if you owe money. Trying to file when going through a divorce can be especially difficult. That is why it is important to work with your attorney and a tax professional. There are many decisions to make when filing taxes during a divorce. First, you have to determine your filing status: married filing jointly, married filing separately, or head of household. If you decide to file jointly, make sure to be extra diligent. If your spouse prepares the returns, have your own tax professional review them to ensure that they are accurate. The IRS does not care that your spouse prepared or filed the taxes. If you sign the return, you can be held liable for misreporting.
If you decide to file married filing separately or head of household (if you qualify), the following determinations have to be made (and in some instances negotiated):
1. Who gets the mortgage interest deduction(s) and other itemized deductions?
2. Who gets to claim the child(ren)?
3. Can I deduct the temporary support?
4. Can I deduct my legal expenses for the temporary support?
5. Who gets to claim the Child Tax credit and the Household and Dependent Care credit?
And if you are going to file jointly, as often occurs during a divorce, talk to your attorney and accountant as to whether this makes sense. Some questions here:
1. Should I file a joint return?
2. Will I be penalized if I don’t file a joint return?
3. What is an indemnification agreement? Should I sign one? Will it really protect me?
4. What is an innocent spouse and do I qualify?
5. How are taxes due going to be paid?
6. How are refunds going to be divided?
Some of these decisions will be made by your tax professional, but all of these questions need to be answered before filing. Since these issues can have real implications, financial and otherwise, people should make sure they speak to their legal and accounting professionals before making a final decision. Work with your attorney to prepare the information needed by the tax professional to file taxes during a pending divorce. Oftentimes, clients are able to save time and money by coming to an amicable resolution with their spouse regarding the above questions and the filing of the taxes. But there are occasions when going to court to obtain an order from a judge that determines certain tax questions is necessary. Start considering how you are going to file your taxes as early as possible, so you can avoid unnecessary delay. If need be, you can seek an order from the court making the necessary determinations to get your filing done.
Sandra C. Fava is the editor of the Riker Danzig Family Law Blog and heads the Family Law Practice Group of Riker Danzig Scherer Hyland & Perretti LLP. Sandra is resident in Riker Danzig's Morristown, New Jersey office though she practices throughout New Jersey. You can reach Sandra at (973) 451-8453, or firstname.lastname@example.org.