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Resolving tax issues related to divorce

On Behalf of | Apr 15, 2016 | Divorce

There is a day devoted to just about everything. In April, there are two interesting ones that form the basis for this post.

The lesser known is ex-spouse day; the better known is tax day. Ex-spouse day was yesterday on April 14. Tax day, which is normally April 15th moves to April 18th this year thanks to Emancipation Day – a holiday celebrated in Washington D.C., home of the Internal Revenue Service. For the divorced and separated here are some things to consider.

Correct filing status

If your divorce was finalized last year, you have one more year filing taxes with your ex-spouse. Remember your filing status must reflect your situation at the end of 2015.

Do not make a costly mistake by filing the wrong status. You will have to choose between married filing joint and married filing separate. Generally, ex-spouses who divorced last year or those still in the process benefit from filing jointly and accessing deductions unavailable with a married filing separate status.

Certain situations lend themselves to filing separate. If you have worries that an ex-spouse had a large tax liability it may make sense to file separate. For example, this could happen if your ex-spouse was self-employed and did not make estimated payments. Remember with joint liability, you could be on the hook for the full tax liability if your ex- decides not to pay.

Child tax exemptions

After several years, you may still need to consult your final divorce order to remember who takes the tax child tax exemption(s) in which years.

The IRS watches closely to ensure that two taxpayers do not claim the same child. An ex-spouse who files early and incorrectly claims your child as a dependent could mean your return is rejected. You may even need to go back to court to have a judge enforce your final order.

File for an extension

Tax filing day is almost here. If you have unresolved questions, file a request for an extension. The IRS will allow you until October to get issues sorted out.

If you owe taxes, it will not stop interest and penalties accruing for a late payment, but it will avoid the other penalties that come from late filing your tax return.