Tax Time Considerations for Separated Couples

Tax season is generally not a favorite for most individuals, but tax season can be particularly onerous if you are newly divorced or separated.  Despite your angst or anger, you are now required to think clearly, reasonably, and rationally in order to avoid common mistakes on your federal tax return.

One of the most vital decisions you need to make is which filing status you choose: married filing jointly or married filing separately. If you were separated but still legally married on December 31, 2008, those are your only two options. It is wise to figure out what you will owe under both scenarios and gain an understanding of the pros and cons of each strategy.  This may require more work on your part, but if it saves you hundreds or even thousands of dollars, then it is well worth the effort.


While you are more likely to minimize your tax obligation or increase your refund by filing jointly, there are a few reasons you might want to file separately. Tax experts often advise that you not blindly trust your estranged spouse. First, when you sign a joint return, you become equally liable for all taxes, penalties and interest owed. If your ex will not share the tax bill, the IRS can levy a claim against you for the entire amount. There are, however, methods to circumvent that liability such as applying for innocent spouse relief if your spouse substantially understated her income and you had virtually no way of knowing that at the time you signed the return. Please be aware that this action may delay the process considerably. Second, your ex may owe back taxes, back child support from a former marriage or may have defaulted on a federal student loan. If you file a joint return under this scenario, any refund you may be entitled to may be applied toward your ex’s debts. Third, one of you may have a low income, but deductions which may be claimed, such as substantial medical expenses. In this situation, it may make more financial sense to file separately.

Please remember that if you file separately, you are forfeiting a number of deductions and credits, including the earned income tax credit (EITC), child and dependent care credit, adoption expenses credit, hope and lifetime education credits, qualified tuition deduction, and the student loan interest deduction. Further, if you are collecting Social Security benefits, all of this will be taxable.

The custodial parent generally claims the dependency exemption, when you file separately, in the absence of any written agreement stating otherwise. If you are the noncustodial parent and you earned the greatest income, it may make more financial sense for you to claim the exemption. Should this occur, the custodial parent will be required to sign a release giving you the exemption, and you are required to attach that form to your tax return. If such a release is effectively granted, the custodial parent may not take the child tax credit on his or her return. In addition, the dependency exemption cannot be split between the two of you-even if the children live with each of you for half of the year.  Only one parent may claim the exemption.  

Although you may want to minimize contact with your ex, you will need to work together tax-wise, even if you file separately.  Please be mindful of the fact that if you are filing separately you either both are required to itemize or you both have to take the standard deduction. In the event you itemize, remember to coordinate who takes which deductions – those deductions that you would have claimed as a couple.  In this situation, duplication is not allowed. The one exception applies to community property states where you and your spouse may be allowed to split the deduction for allowable expenses that were paid for using funds from a joint account.

If you choose to file jointly, decide before filing your return just how you will divide the refund or the tax obligation. Some couples decide to split the refund or tax obligation equally. Other individuals may choose to receive a refund amount or remit payment for a tax bill in proportion with their salaries. Depending on the nature of your relationship with your ex, you may want to have this agreement in writing and made part of a court order. A good rule of thumb to live by is to treat this like you would any financial arrangement or contract.

With regard to any frustration this situation may cause, an advantage is that the tax and financial advice received to accomplish these goals may be written off on your return.


Milandria King is a Senior Attorney in the Memphis, Tennessee office for Cordell & Cordell, P.C., admitted to practice law in the state of Tennessee. Additionally, Ms. King is admitted to practice before the Sixth Circuit Court of Appeals and before the United States District Court for the Western District of Tennessee. Her memberships include the American Bar Association, the Memphis Bar Association, the Tennessee Bar Association, as well as the Association for Women Attorneys.

Read more about Ms. King.


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