Divorce lawyers often get questions as to how to deal with taxes in a divorce context. There are two basic filing statuses for separated spouses: married, filing jointly; married, filing separately. First, a preliminary point: if you were married in all of 2012, you cannot file as though you were not married, even if you are separated. Second, if you were divorced in 2012–even for one day–you cannot file as a married person. (Consideration should be given to this if you are about to divorce late in the year and have some discretion as to whether you divorce before year end or not.) Here are some considerations. You may be so hostile to your spouse that you do not want to cooperate at all, even if it means unnecessary tax losses. If you are, you should take a careful look at whether you are cutting off your nose to spite your face. As for cooperation, it usually comes down to two basic considerations: one, will your spouse file an honest return, and two, what status will benefit you most. If you have any doubt about whether your spouse will file an honest return, you should probably decline to file jointly, as you will probably be liable for any dishonesty on the part of your spouse. (Don’t put too much stock in the “innocent spouse” doctrine.) If you think your spouse will prepare an honest return, consider filing married, filing jointly. Have your CPA run different scenarios to see how you turn out best. For example, you might receive a refund if you file separately and can keep all of the refund. But, you might receive an even bigger refund if you file jointly and split the refund according to an agreement. The pros and cons have to be weighed. If you will clearly benefit from filing jointly and have no concerns about your spouse’s tax honesty, it may prove beneficial to file jointly. If you do, make sure you arrive at a reliable and written agreement as to what accountant will be used, how he/she will be paid, and how any refund will be divided. Some of these considerations may be affected if there is a Temporary Order or Separation Order in effect. Check with a CPA in your area before making any decisions. (I checked with George Butler of Grantham Poole, CPAs before posting this!) Note: these recommendations are made from the experience of a divorce lawyer and not from the vantage point of a tax lawyer or CPA, who should be consulted before filing any return.
