You determine your tax filing status based on your marital status on the last day of the tax year, which is December 31st for most individuals. You are considered divorced if you took status as a single individual before December 31st of a given tax year.
Under IRS rules, you’re technically still married if your divorce is not yet final as of Dec. 31, even if you or your spouse filed for divorce during the year. Likewise, if the court issued your divorce decree on Dec. 31, you’re considered unmarried for the whole year and you must file your taxes as a single person.
It doesn’t matter if you and your spouse have been living separately—you’re still married according to the tax code unless a court order states that you’re divorced or legally separated. If you’re separated by court order on Dec. 31, not just living apart on your own terms, you’re no longer married and you must file a single return.
Sometimes it actually makes sense to postpone your date of status until January 1st of the following year if it saves tax dollars. You must agree with your former spouse to postpone the date of status and file married jointly, but it may be worth it to both of you to potentially reduce your tax bill during the period to offset legal fees from the divorce.
It pays to be negotiable on tax issues. Cross Roads Divorce Advisors can help you work with your spouse to help determine the most advantageous filing status for your family in the year of your divorce.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
Lou Falvo is a Certified Divorce Financial Analyst® and CIMA® (Certified Investment Management Analyst) who assists clients by evaluating the tax and financial aspects of divorce. Lou is dedicated to reducing the burden of each client by thoroughly examining the financial elements of the client’s divorce, with a keen focus on what is in his or her best interests. Contact Lou to find out how he can assist you with your divorce proceedings at lfalvo@crossroadsdivorce.com or (585) 542-2382.