The federal tax deadline was pushed back to July 15 to accommodate the challenges taxpayers face amidst the pandemic. Early filers likely did their taxes before the announcement, but there are still many who will wait until the last possible moment to do it. One wrinkle experienced by some is that they are getting divorced or recently finalized their decree.
This means significant changes in how some file taxes this year and in the near future. A tax professional should handle specific tax advice, but there are some general questions that can be addressed. These include:
Should the marital status change?
The IRS still regards the couple as married if the divorce was not finalized in 2019. Those who did finalize their divorce at any time last year should either file as head of a household, if applicable, or as a single person.
Should we use a joint return if it is not finalized?
The standard deduction is $12,200 per spouse, so it may make sense to put $24,400 towards one spouse if their tax obligation is higher because they earn a much higher wage than the other spouse.
Who should claim the children?
Either parent can claim the kids as dependents, or the parents can divvy them up (the parents could divvy four kids up, so each claims two). Regardless of the arrangement, the parents should honor it to avoid both claiming the same children.
What about deducting support?
The 2018 Tax Cut and Jobs Act eliminated this deduction for child support or spousal maintenance.
Can we modify our divorce decree to fit the new tax law?
It can make sense for ex-spouses to modify their decree if the new law reduces their tax burden.
Tax issues often addressed during negotiations
There is a long list of financial details that need addressing when couples divorce, including who will claim the children. Along with the services of an experienced family law attorney, divorces with complicated finances will often also require an experienced tax attorney or accountant to help work out the details of dividing assets fairly and equitably.