Question
My husband and I split up at the end of September. He says that we can’t file a joint tax return, because we are living apart and I have already filed for divorce.
He thinks that he will be better off by filing separately. But I still have taxes withheld from my pay checks based on a joint return. I don’t want to get in trouble with the IRS, but if I file separately I’m going to have a pretty huge tax bill for last year.
What can I do?
Answer
You and your husband were still married on the last day of the tax year – December 31st. That means that so far as the IRS is concerned, you may file a joint return if you wish to do so. Only a CPA who is familiar with all the details of your tax position can give you detailed advice about your particular return. However, in general terms their are several reasons that couples who are separated but not yet divorced should consider filing a joint return for the year of their separation.
Most analysts agree that married couples enjoy a more favorable basis of assessment under IRS rules than do singles – that means lower adjusted gross income figures for marrieds filing jointly. A joint return also avoids conflicts over who gets to claim the mortgage interest exemption and the exemptions for any children. One of the biggest reasons that divorcing couples should give serious consideration to filing a joint return is that doing so may avoid the creation of a new community debt.
Since you and your husband only separated at the end of September, you were a marital community for nine months out of the year. That means that 9/12ths (3/4) of your combined income is a community asset, and the taxes on that community income is a community debt. Your husband might think that filing separately is smart if his own separate return gets him a refund. But he won’t necessarily be better off if your marital community winds up with a big tax bill on your (separate) return.
Most of your tax bill (3/4ths) will be on the table as a debt to be divided in your divorce, just like the car loan and the credit cards. Similarly, 3/4ths of any refund that either of you get is a community asset to be divided in the divorce.
And as any lawyer can tell you, dividing assets is a lot easier than dividing tax debts.
