Tax season can cause tension for families, and substantially more so for those battling with the additional inconveniences associated with overseeing expense matters during the separation procedure. Factors may fundamentally affect your figuring and by and large duty obligation, for instance, when building up spousal and youngster supporter impermanent provision. hatchet time can get a larger number of cerebral pains a few years than in others. On the off chance that you’ve as of late isolated from your companion or were separated, you’re confronting a mess of issues you haven’t needed to manage previously, and you presumably have a few inquiries, as well. Here are a couple of duty standards to remember.
What are My Options for Tax Filing Status During Divorce?
There are several filing options to consider. Though you have probably been filing as Married Filing Jointly up to the time you and your spouse separated, that is not necessarily the best option for you during your separation while in the process of divorce. Your tax filing status alternatives include:
• Married Filing Jointly (MFJ)
• Married Filing Separately (MFS)
• Head of Household (HoH)
Even after filing your divorce complaint, the IRS allows you to file as MFJ. However, again, that may not be the best option under your current circumstances. Consider the information in the following sections to help you determine the best status for you when filing your tax returns during your divorce process.
Should You File a Joint Married Return If You’re Still Married?
You have the option of filing a joint married return with your spouse if you’re still married, even if you no longer live together. This can be beneficial because—among other things—it makes you eligible for a higher standard deduction when you combine your incomes on the same return. But this isn’t really black-and-white, either.
Your standard deduction is $12,200 in 2019 if you file a separate married return, up from $12,000 in 2018. Keep in mind that the 2018 deduction applies to the tax return you’ll file for that year in 2019.
This is the same as the standard deduction for single filers. The standard deduction for those who are married and filing jointly is $24,400 in 2019. The standard deduction for married couples filing jointly for the 2018 tax year is $24,000.
So this works out as something of a wash if you and your spouse earn comparable incomes. If you divide that $24,400 standard deduction by the two of you, that’s a $12,200 for each of you, the same as you could claim filing a separate return. But if you earn a lot more than your spouse—or maybe she doesn’t work at all—that $24,400 can subtract significantly from your taxable income.
But there’s a downside to filing together, too, particularly if your marriage is on the brink. You become jointly and severally liable for all taxes due when you file a joint return, even on income that your spouse personally earned. This means that if you earned $20,000 in 2018 and your spouse earned $80,000, the IRS can collect the taxes due on that ,000 from you if she doesn’t pay them. If she’s less than honest about her income or if she fraudulently claims a credit or deduction, you’re on the hook for these misdeeds, too.
You can deny liability subject to certain rules, but this might be a problem you don’t need when you’re trying to put your marriage behind you, and there’s no guarantee that the IRS will agree that you’re not liable.
Can You File as Head of Household?
Here’s the place it gets somewhat more confused. You’re not really constrained to recording a joint wedded or separate wedded return if the IRS says despite everything you’re hitched. Nor must you totally document a solitary return in case you’re actually separated. You may fit the bill for another recording status: head of family. Furthermore, it tends to be extremely profitable.
Recording as head of family unit enables you to guarantee a bigger standard derivation—,350 in 2019, up from ,000 in 2017—and you can gain more pay before moving into a higher duty section. It can likewise influence your qualification for certain expense credits. In any case, there are some exacting principles.
You may qualify as head of family unit regardless of whether your separation isn’t last by Dec. 31 if the IRS says that is no joke.” “As per IRS controls, this implies:
• You and your spouse stopped living together no later than May 31 of the tax year.
• You paid at least 51 percent of the cost of maintaining your home for the year.
You must also meet a few other requirements:
• You must have a dependent. This would typically be your child, but other relatives can qualify, too. Your dependent must have lived with you for more than half the year, but some relatives, such as your parents, don’t have to live with you if you pay for more than half their living expenses.
• You must have the right to claim your dependent on your tax return even if you don’t actually do so. Maybe you would have been entitled to claim your child except you gave your spouse the right to claim her as part of your divorce terms. A parent who is entitled to claim a child can transfer her right to the other parent by signing and submitting Form 8332 to the IRS.
• You must file a separate tax return from your spouse to claim head of household filing status. If you file a joint married return, neither you nor your spouse qualify as head of household.
What if My Spouse and I are separated but Still Live in the Same House?
In the event that you have isolated from your mate by righteousness of recording a separation grievance with the Utah family court, however you and your mate and minor youngsters all keep on living in a similar house, at that point your expense documenting status choices are probably going to incorporate MFJ, “Wedded Filing Separately” (MFS) or “Head of Household” (HoH).
• If you are the family’s essential pay worker, you will presumably be best encouraged to document as MFJ, because of the more ideal assessment treatment under that recording status for the individual in that acquiring position.
• If you are a homemaker, without asses sable salary, at that point your recording status might not have much effect on the result of your government form documenting. Documenting MFS won’t generally make your annual expense commitment better or more terrible. In any case, a portion of your other budgetary premiums applicable to your lower procuring position, can progress toward becoming elements that you ought to consider before consenting to document as MJS (counting those tended to in the area underneath).
As the Income-Dependent Spouse, What is the Best Way for Me to File?
The kinds of questions that become relevant for you, as an income-dependent spouse during a divorce are:
• What is your personal financial responsibility for any overall tax liability that may exist as a result of your spouse’s income (after all deductions and allowances have been processed in your joint tax return filing)?
• What has been formally agreed about the financial benefits you will personally receive, in return for your agreement to permit filing as MFJ?
• Has it been formally agreed that you will receive half of any tax savings realized due to filing MFJ with your spouse?
• How will any tax refund be allotted and issued to you?
Although an amended tax return can be filed for three prior tax years, your tax filing status cannot be changed from MFJ to another status. Therefore, you need to have the above questions answered and resultant formal agreements executed (put in writing) before you sign the tax return or enable verification of an e-filing.
Would you be able to Deduct That Child Support You’ve Been Paying?
Sadly, you can’t deduct kid bolster you pay. The IRS takes the position that in the event that you and your ex had stayed hitched and if your family had stayed flawless, you couldn’t have asserted an expense reasoning for cash you spent encouraging, dress, and shielding your youngsters. These are close to home costs, despite everything they’re viewed as close to home costs after you separate.
The kid bolster you pay is to serve your children, so your ex doesn’t need to guarantee it as pay, either. Nor do your kids. Kid backing is an assessment nonpartisan trade of cash.
What Happens When a Support Obligation is involved?
Think about which of these circumstances concerns you, before making an assurance on the best way to document your annual duties.
•Neither you nor your mate is qualified to get impermanent provision or spousal help or youngster support while you and your mate and minor kids are for the most part as yet living in a similar house.
•If you and your life partner live in discrete houses, regardless of whether a separation grievance has not been documented, the IRS necessities and recompenses might be altogether different for you, contingent on your duty recording status.
•If your position is as a pay subordinate companion, and on the off chance that you likewise keep up physical guardianship of your kids during half or a greater amount of evenings, at that point you are probably going to be entitled under Utah family law to document a case for youngster support with the family court. What’s more, you may likewise be qualified for brief provision/spousal help. In the event that this will be this case, at that point your duty documenting status is evaluable under an altogether extraordinary sort of examination.
What is the Most ideal Approach to Record for Youngster and Spousal Help?
On the off chance that you have petitioned for spousal help, the date you began accepting help installments is significant for your own expense purposes. Remember that:
•Child bolster you pay can’t be deducted from your assessable pay. What’s more, you are not required to guarantee youngster bolster paid by your kid’s other parent as pay.
•However, impermanent divorce settlement/spousal help is deductible for the mate who pays this sort of help. What’s more, it must be incorporated into the assessable pay of the life partner who gets the help.
•So, a cautious investigation of the similar advantages (to you as the payee) of the alternative of asserting this sort of help as a finding, rather than MFS documenting ought to be performed by your assessment preparer, related to your separation lawyer, to guarantee that every extraordinary factor of your circumstance are considered.
•You may pick to record under the status of HoH, by asserting your youngster as a ward. Furthermore, on the off chance that you are getting impermanent divorce settlement/spousal help, while you are the essential caretaker of your youngsters, you have no legitimate commitment to surrender the exception for your kid as a ward to your mate/ex-mate.
•When figuring bolster commitments, recall that help laws base the measures of such commitments on the gatherings’ total compensations. In this way, applying the best possible expense investigation can shift essentially affect the measure of help evaluated. As it were, the less that you cover in government expense, the more you net in pay that can be considered in figurings to decide support.
The Tax breaks and Employments Act (TCJA) disposed of individual exceptions from the assessment code when the law became effective in January 2018. You could deduct $4,050 for yourself, your life partner, and every one of your guaranteed wards in 2017, yet not anymore…at least not until the TCJA conceivably lapses toward the finish of 2025.
So does it truly make a difference any longer which of you asserts your children? Indeed, it does.
An entire slew of tax cuts rely upon having the option to guarantee at least one wards.
Keep in mind, you can’t qualify as head of family without a ward. The Earned Salary Credit is worth more in the event that you have in any event one ward, and the more, the better. At that point there are expenses related with your wards that can help increment certain assessment derivations, for example, the medicinal cost conclusion and instructive findings. What’s more, this isn’t even to make reference to the Child Duty Credit and the Kid and Ward Care Credit.
Along these lines, indeed, you’ll need to guarantee your children on the off chance that you can.
Can you Deduct the Expenses of Your Separation?
Your separation lawyer has ideally represented all the duty consequences of the property trade accommodated in your separation settlement or announcement, however conceding to authority terms and working out the support request most likely cost you a ton in legitimate charges. Would you be able to deduct those?
Shockingly, not any longer. You would never deduct expenses related with getting a separation, nor might you be able to deduct most court costs. However, you could deduct charges you paid that were related with creating pay, for example, on the off chance that you needed to pay an attorney to get a provision request. Yet, this was a different organized derivation, and the TCJA wipes out these from the assessment code also.
It’s conceivable that Congress will restore the TCJA toward the finish of 2025, however a considerable lot of these tax cuts could return if that doesn’t occur. Meanwhile, notwithstanding, plan your separation or partition around no different derivations, no close to home exceptions, or no tax reduction for paying divorce settlement.
Free Consultation with a Utah Tax Attorney
If you are here, you probably have a tax law issue you need help with, call Ascent Law for your free tax law consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
