Attorney, Cordell & Cordell, P.C.
Around this time every year, clients start to ask me how to approach their tax filings while their divorce litigation is pending. As the parties are not yet divorced, does it benefit the client to filing separately or filing jointly?
Read on for the answer to that question and more advice about how to handle tax issues while a divorce is pending.
First, let me qualify all of my responses in that I am not a tax lawyer, nor do I profess to know the ins and outs of all of the IRS code. The advice I am about to give is practical advice, based upon my years of experience as an attorney.
I tell all of my clients to file their returns in a way that maximizes the benefit to them. For example, if the parties have children and the case is pending, it makes sense to file together as there’s a good likelihood you will get a tax return. Even if you have to end up sharing part of the return with your soon to be ex-spouse, getting some money back is certainly better than having to pay!
Sometimes, it makes sense for the parties to file separately while a divorce is pending. This usually makes more financial sense where there has been liquidation of retirement funds or a sale of stock where the tax burden hasn’t been fully satisfied. This also may make sense if your ex has not had enough money taken out of her checks during the year, but you have had too much taken out. You surely don’t want to end up having to pay for her tax burdens!
Some other specifics to remember if you are filing separately:
- If you have been paying the mortgage on the home pursuant to a temporary order, you can take the mortgage interest deductions for the months you have paid.
- If you paid real estate or personal property taxes pursuant to a temporary order, you can take those deductions.
- If you’ve paid daycare, take the deductions for the amounts you have paid.
- If you’ve been paying maintenance or alimony under a temporary order, be sure to take those deductions.
What happens if she runs and files and takes all the deductions to which you are entitled? The Courts can’t force you to file your taxes a certain way – state (family) courts can’t have authority over matters of federal law. However, I have been in cases in the past where the opposing party has filed first, taken all the deductions and received a huge return. Then, when the opposing party files second, they usually end up having to pay.
In those situations, Judges tend to look unfavorably upon the party that rushed and took the deductions to which they may not have even been entitled. I have had Judges in the past set off additional property to my client to compensate him for the payment he had to make as a result of the opposing party’s malfeasance in filing. So, if this happens to you, ask your attorney to bring up the situation to the Judge and see if he or she can help get you some financial relief elsewhere.
Whether you take your taxes to an accountant or tax preparation service, or if you do them yourself, be sure to fill out your return in such a way that it maximizes your benefit. You are going through one of the toughest times in your life, both emotionally and financially. There’s no sense in adding to the financial burden if you can avoid it, so be sure to discuss with your attorney what you can do on your taxes to maximize your benefit.
Kristin K. Zurek is an Associate Attorney and Litigation Manager in the Cordell & Cordell, P.C. office in St. Louis, Missouri. She has dedicated her practice exclusively to domestic litigation. Ms. Zurek is licensed to practice law in the state of Missouri.
Ms. Zurek began her career as a law clerk in a family law practice while attending law school. She has worked on many family law matters, helping clients to navigate the complex legal system and to successfully restructure their families while serving to advocate for her client’s best interests.