Marriage can be, among other things, a boon to your tax bill. Married people make more, qualify for more credits, and generally enjoy a lower bill than the single. And it can be an unexpected, and unpleasant, surprise come April.
What should you do, and how should you handle it? Here’s an overview of the tax issues that’ll be facing you post-divorce, on the federal and state level.
Divorce, Taxes, and Backdating
Here’s the problem with taxes and divorce: Taxes don’t cover your current situation, but rather your situation when the government was collecting your money; that is, the previous year. If you were married during that tax year, you may have to file as married even if that’s not truly the case.
First off, you’ll need to figure out what type of tax return to file. There are three options: Married and filing jointly, married and filing separately, and head of household.
Head of household is likely ideal for most situations. For you to qualify, your spouse has to have not lived in your home for more than six months; you have to have paid more than fifty percent of the upkeep of the household; your home must be the primary home for any children or other dependents; and you can claim your dependents on your taxes. This will completely sever your return from your spouse’s and is often the best choice for both parties.
Married and filing separately is best for difficult divorces with no children. However, it will limit your exemptions and deductions: For example, you and your spouse can’t claim the same dependent on your separate returns. You and your spouse will have to file in the same way, as well. If they itemize deductions, you’ll have to do the same.
There is, however, one big advantage. If you’re not fully aware of your spouse’s income situation, it’s not your problem. Your returns are separate, so if some fraud on your spouse’s end comes to light, you won’t be dragged into it, at least not by the IRS.
Married and filing jointly offers more deductions and is less complicated on that end, but it can still be messy. Any tax debt or tax returns become a part of the marital estate and will have to be divvied up just like any other asset. There’s a chance you could be stuck with part of your spouse’s debt, or that they could take a part of your return. Similarly, if your spouse has been up to some financial trickery, or screws up their return, your name will be on it, and you’ll likely need to get a lawyer and prove you’re innocent.
The good news? Georgia state taxes are largely fairly straightforward on this matter. The bad news is that whatever you choose on the federal level, you’ll have to stick with on the state level. Again, any returns or liability on a joint return will become part of your divorce proceedings, whether you want them to or not. Also be aware that anything you file might be petitioned if a case is particularly ugly or there’s disagreement on your income.
In the end, remember that you’re far from alone in this situation. Thousands of women have faced it and come through. Keep your head up, and possibly hire a good tax accountant, and you’ll be no different.