How should you file your taxes if your divorce is pending? This question comes up every year when tax returns are to be filed. The first thing to remember is that you must file your federal and state income tax returns as “married” if you were still married on December 31st. Generally, the parties to a pending divorce will receive a larger tax refund (or have a lower tax obligation) if they file joint income tax returns than they will receive if they file separate tax returns. However, the parties should work together and prepare their tax returns both ways to determine which method will maximize their tax refund or minimize their tax obligation. If the parties are unable to agree on how their tax returns should be filed, a divorce attorney in Lafayette, IN may get involved, and the divorce court will issue an order specifying how the tax returns are to be filed and how the resulting tax refund or tax obligation will be divided between the parties.
Sorting Out Returns - Divorce Attorney Lafayette IN
Every year, the attorneys at McCoy Law receive panicked phone calls from clients who are concerned that his or her spouse will file a separate tax return claiming all of the available deductions, thereby leaving the client with a significantly reduced tax refund or even a tax obligation—instead of otherwise filing a joint tax return and receiving a significant tax refund.
Obviously, such a result would not be fair, since both parties should be able to share the exemptions for their children and the deductions they earned throughout the year. While one spouse may inappropriately file a separate tax return before a decision can be made by the divorce court, the other spouse retains the right to request relief from the court. In these cases, the spouse who selfishly files a separate tax return will most likely be ordered to compensate their spouse by paying them the difference between the tax refund they received and the refund they would have received had the parties filed joint tax returns.
In the cases where it is not possible for the aggrieving spouse to compensate the injured spouse quickly, the court may order the parties to have a Divorce Attorney in Lafayette IN file amended tax returns and order the resulting tax refund or tax obligation to be divided between the parties in a way that adequately compensates the injured spouse after taking into consideration the tax refund already received by the spouse who filed inappropriately and any attorney fees incurred by the injured spouse to petition the court for this relief.
Joint or Separate Tax Returns
Thus, when a divorce is pending, neither party should file their tax returns unless an agreement has been reached between the parties about how the tax returns will be filed, and this agreement should be reduced to writing and submitted to the divorce court for approval before the tax returns are filed. If the parties are unable to come to an agreement about how the tax returns should be filed, then the parties should seek out a Divorce Attorney in Lafayette IN for an order from the divorce court addressing these issues before the tax returns are filed. If one spouse files their separate tax returns without first obtaining approval from the court, that spouse will most likely will be ordered to compensate the other spouse and may be sanctioned by the court for their actions.