Should I file taxes during my Divorce case in Union County, NJ?
Providing Guidance to divorce clients across Summit, Elizabeth, Scotch Plains, Linden, and Union County
The stresses of divorce are numerous. The proceeding’s impacts on family, emotional life, and finances can place a strain on all involved. Yet stressing over the world of federal and state taxes during a divorce isn’t necessary. While there is much to consider that will affect taxes – including splitting assets and child custody – the following advice can help you smoothly file taxes no matter what stage of the New Jersey divorce proceeding you are within.
Many attorneys will suggest that whatever most benefits the marital estate is the tax filing route to take, but there are additional considerations to keep in mind. With multiple considerations insight, the filing decision for a divorcing couple can be handled amicably and beneficially for all involved parties.
Joint Returns vs Married Filing Separately
Because the tax rate is determined by your filing status, it is important to calculate what your liability would be if you filed jointly, and what your liability would be if you filed separately. Each may have benefit, and while there are likely more tax savings when filed as a couple, there equally are risks as it relates to any dues.
The IRS provides the option to file taxes separately while married. While this generally results in more having to be paid, it does liberate you from bearing the brunt of a partner’s tax debt. IRS regulations determine that, even when filing separately, if one partner elects to take the standard deduction, the other must as well; the same applies to itemization. Itemized deductions such as house mortgage interest and property taxes must be limited to what you as an individual paid. Earned income tax credits and higher education tax credits are not available for individual filers.
You may file a Request for Innocent Spouse Relief on Form 8857 if you are legally required to file jointly and owe due to the tax debt of your partner.
Tax-deductible Legal Fees
While the Internal Revenue Service (IRS) does not offer deductions for legal fees related to divorce, in some cases legal support around taxes and alimony is considered deductible. If you have sought counsel regarding the tax implications of the splitting of assets, income, property, make sure to have itemized receipts from these consultations available for audit, and look out for potential deductions when you file your taxes.
Filing Status: Single or Head of Household
New Jersey allows legal separation status before divorce is finalized, so if you have gotten a decree of separation maintenance before the end of the tax year (December 31), you may file with “single” or “head of household” status. “Head of household” status may be claimed if you have a dependent who lives with you more than your spouse does. As such, you are considered a custodial parent, and you may claim child-related credits.
The IRS considers a couple married for the entire tax year: January 1 to December 31. As such, your legal marital status at the end of the year will affect your capacity to file taxes as “single” or “head of household” versus “married.” Depending upon where you live, your separation may not be honored by law, and therefore you may not change your status. Review relevant New Jersey tax laws and make sure to change your tax filing status as soon as you can after the divorce proceedings are finalized.
Above all, when going through a divorce you will need an attorney who is knowledgeable and experienced in not only divorce law but tax law as it pertains to divorces. The proper attorney can make all the difference between a smooth or a rough transition into your post-divorce life.
Contact Us for a Divorce Consultation to Protect Your Rights and Your Finances
At Law Office of Edward S. Cooper, our attorneys have extensive experience supporting tax filing for spouses within divorce proceedings, as well as such divorce considerations that will affect tax status as child custody agreements.
Our unique approach focuses on finding solutions that focus on protecting the stability of families and family finances, ensuring that all benefit from having the resources needed to protect their futures and the futures of their children.
To speak with our firm today in a comprehensive and confidential case assessment regarding your divorce and tax filing considerations, please at (908) 481-4625 or visit our online form to schedule an appointment.