If you and your spouse are talking about divorce, an issue that may arise is who pays your income taxes. Responsibility for paying income taxes changes for couples once they file for divorce and then again when the divorce is finalized. Adding to the complexity is the intersection of tax and matrimonial law.
Tax Law
Your marital status on December 31 of the applicable tax year determines your tax filing options under tax laws. As long as you are legally married as of December 31st, you can choose to file jointly with your spouse or file separately. If you file jointly, each of you is fully liable for the joint taxes owed. If you file separately, you are only personally liable for your own tax bill.
Once your divorce is finalized, you can only file as a single taxpayer.
Matrimonial Law
While a couple is married and before a divorce action is filed, both spouses have a one hundred percent right to each other’s income as marital property. As such, both of you are responsible for paying taxes on that income. Income remains marital property even if you are legally separated, living apart or contemplating divorce.
Once a divorce action is filed, your income becomes your respective separate property, and each one of you is responsible for paying his or her own income taxes. Despite this, you can still file jointly under tax laws as discussed in the previous section. Many couples do this because it can save on taxes due to wider tax brackets and higher deductions or credits for joint filers. However, if you and your spouse file jointly while you are waiting for your divorce to be final, you would need to work out between you your respective share of the taxes on your earnings from the date of filing of your divorce to the end of the calendar year and for each calendar year thereafter until the divorce judgment is signed.
Tax Considerations in Divorce
Consulting a tax professional during your divorce can be helpful and not just because of your income taxes. Divorce attorneys will often recommend bringing in a tax professional to help ensure that clients understand the tax implications of the divorce settlement and that the settlement is structured so as to reduce the overall tax burden for both parties.
If you are considering divorce and are concerned about taxes, contact us to discuss how we can help you achieve a positive result in your case.
