Question on Taxes

[CM2009]

[COLOR=#810081]http://www.loveshack.org/forums/t183846/[/COLOR]

 

Hey LS it's been a minute since I've been on here but I have a question to those who've been through divorces. Ok my STBXW and I are about to file taxes she has 2 kids from a previous marriage and doesn't bring home much income and its been like this since we've been married, and I brought home mostly all the income, and when we were together we would either split 50/50 or since I was bring home the money and I loved her it would be 60/40 in her favor. Last year was our first year seperated and we did 50/50. She only gets money back from the kids, now my question is would it be better for me to just go in solo or still go in with her? Let me know LS family.....Be blessed!!!

Edited February 8, 2010 by CM2009

[CM2009]

anything anyone???

[carhill]

Your post is confusing....

 

BTW, TurboTax home and business is 100 bucks and it will run scenarios to gain you the best tax treatment.

 

My stbx and I are filing married, filing separately. We don't have to, but this election assures a level of accountability during the divorce. If we had kids, we'd follow the law and report those dependents in a way that afforded us the least taxation. I would assume that, if filing separately, the dependents would benefit the higher wage-earning spouse the most, but that isn't always the case. One or both spouses could have earnings from non-wage activities which has bearing.

 

Did you and your spouse live apart for the entirety of 2009?

 

If you are not conversant with general tax and accounting principles, I'd suggest hiring a tax advisor/preparer. I've been doing taxes since my dad taught me 30+ years ago (he was a CPA) but I don't make my living doing them. Better to get proper advice from someone who does. They generally don't give it away

[CM2009]

Your post is confusing....

 

BTW, TurboTax home and business is 100 bucks and it will run scenarios to gain you the best tax treatment.

 

My stbx and I are filing married, filing separately. We don't have to, but this election assures a level of accountability during the divorce. If we had kids, we'd follow the law and report those dependents in a way that afforded us the least taxation. I would assume that, if filing separately, the dependents would benefit the higher wage-earning spouse the most, but that isn't always the case. One or both spouses could have earnings from non-wage activities which has bearing.

 

Did you and your spouse live apart for the entirety of 2009?

 

If you are not conversant with general tax and accounting principles, I'd suggest hiring a tax advisor/preparer. I've been doing taxes since my dad taught me 30+ years ago (he was a CPA) but I don't make my living doing them. Better to get proper advice from someone who does. They generally don't give it away

 

We only lived together through March and that was it!!!

[carhill]

There are certain rules/benefits which apply if you lived separately for the entirety of the tax year.

 

Also, if you choose to file separately, and one spouse itemizes deductions (Sced A), both spouses must itemize. The IRS cross-references your returns for proper allocation of the tax code wrt such deductions.

 

If you're confused or lost here, I implore you to hire professional help. It's bad enough getting a divorce; you don't want the IRS and your state taxation authority in your face. IME, once there, they tend to hang around for awhile, like dirty underwear.

[In_Repair]

Let me start by saying that I am sort of a tax newb and you could say that I really don't know my 1040 from a hole in the ground... but I've been researching this a lot lately and here's what I have come up with.

 

The IRS considers you "not married" if you and your spouse were either legally separated or divorced at the end of the year, and you were physically separated for the prior six months. The IRS considers individual state law when determining what is a legal separation. In my state, I was considered legally separated as soon as my wife moved out of the marital home. "Not married" allows you to file as single. As for the children, you can claim head of household if a dependent was in your care for at least six months of the year.

 

My state also has a mandatory one year and one day physical separation before you can file for a divorce, which is the reason I am still technically married yet filing Single. I've been separated for about 15 months and we are still trying to work out equitable distribution of marital property. We have two children and we share 50% custody of them, so we are each filing one child as a dependent and claiming head of household. I also get the home mortgage related deductions because I have remained in, and paid all of the expenses associated with, the marital home. It's not completely "by the book", but it's legalish.

[carhill]

Depending on income source and distribution, head of household may be the best solution if the OP and stbx have been living separately for at least six months (and can prove it)

 

Here's some general guidelines:

 

Filing Status

 

Your federal income tax filing status is determined by your marital status on the last day of the tax year:

 

• If you're still legally married, you can file a "married filing jointly" return (the most advantageous filing status for most people)
  
• If you're legally divorced, you'll file as "single" or "head of household"
  
• You can file as "head of household" (a better filing status than "single") if:
  
  • You and your ex-spouse haven't lived together during the past six months
    
  • Your home was the main home for your qualifying dependents (usually your children)
    
  • You paid more than half the cost of keeping up your home for at least half the year
    
  • You can claim the exemption for your qualifying dependent
    

   

 

Pension Benefits

 

The tax status of pension and retirement benefits are governed by a Qualified Domestic Relations Order ("QDRO") filed as a part of your legal divorce proceedings. Benefits paid to a child under a QDRO are taxed to the plan participant. Benefits paid to an ex-spouse are taxed as the ex-spouse's income.

Liability for Taxes Owed

 

Married taxpayers are jointly and severally liable for tax, tax additions, interest, and penalties that may arise out of filing a joint return, even if they divorce later. Under the IRS "innocent spouse rule," you may not be responsible for your ex-spouse's failure to pay taxes that were due while you were married and filing joint returns if you can prove that:

 

• You filed a joint return and there was an understatement or misrepresentation of information that directly relates to your former spouse's items
  
• You didn't know at the time, and had no reason to know, of your former's spouse misrepresentations on your joint tax return
  
• Taking into consideration all the facts and circumstances, it would be unfair to hold you accountable
  

The IRS will consider your level of financial sophistication and the specific circumstances of the tax error.

================

 

In our case, with two businesses and no children and still being legally married, even though we might have gained better tax treatment by continuing to file jointly for tax year 2009, married filing separately acknowledges the adversarial component of getting divorced. It triggers the innocent spouse precepts since we are indeed living separate lives now, but still have co-mingled asset and income streams. As we were not legally divorced on the last day of 2009, we could not file 'single' and, having no children/dependents, head of household would be irrelevant to our circumstance.

 

OP, not knowing the particulars of your circumstance, it's really hard to give concrete advice that would legally avoid as much tax as possible but still follow law with regards to living separately and divorcing. A tax professional can do that for you.

Edited February 9, 2010 by carhill

[CM2009]

@ Carhill I've been back and forth with my tax rep so I gotta give him my numbers for the year

 

@ In_Repair I was thinkin about what u said that I don't wanna pull a fast one on the IRS because I don't want them coming back to me years later saying I owe them or any crap like that!!

[carhill]

If 'tax rep' is a CPA, their job is to advise you of all this stuff. They usually send out a packet relevant to your circumstances (which you share with them); you enter the numbers and return the packet to them and they crunch everything to give you the best tax treatment and/or advise you of relevant items that are 'variable' as to how they're treated. They'll give you an audit risk assessment for different scenarios. During a divorce, they might confer with a lawyer regarding the relevant interplay between taxation and divorce law.

 

If you're not getting this kind of service, I recommend it, as appropriate to your circumstances...

 

Always consider estimating liability and filing for an extension if you need more time to figure it all out. Good luck

[CM2009]

Thanks I appreciate it Carhill, I gave him the numbers and he's is suppose to get back to me later on today....