Geez, its true the whole divorce thing can get quite complicated especially when you throw taxes in the mix. So many tax questions like, “How do I file?…How much in tax deductions do I take?…What does he or she take?…Can they really claim all of that?…Am I liable for any of their penalties?” It can all get very overwhelming. But, take a deep breath and continue reading as we will help you find the answers to your tax questions.
How Should You File?
Still Married by Year End – No Divorce Decree
If you were still married by December 31 (i.e. no final divorce decree), then you can file as “Married filing jointly.” But you must both agree to it and both sign the return. If not, you can file “Married filing separately” or “Head of household.” Generally, “Married filing jointly” is the most tax advantageous but it also exposes you to the most tax liabilities (i.e. interest & penalties).
Divorced Prior to Year End – Divorce Decree
If you are already divorced, then you can file either “Single” or “Head of household. Usually, filing “Single” or “Head of household” doesn’t yield as many tax benefits as “Married filing jointly” but with a divorce decree you have no choice.
How Do I know if I Qualify for Head of Household?
You must meet ALL of these requirements:
- You are unmarried or “considered unmarried” on the last day of the year.
- You paid more than half the cost of keeping up a home for the year.
- A “qualifying person” (not a dependent parent) lived with you in the home for more than half the year.
Keep in mind that if you file “Head of household you are generally in a lower tax bracket and have a higher standard deduction than filing “Married filing separately” or filing single.
Allocating Tax Deductions
As you may surmise, you cannot claim a deduction for something you did not pay for out of your own pocket. For instance, let’s assume that you kicked your husband out of the house mid year, you filed for divorce, he gave you the home but he paid the mortgage payments during the time he owned the home. Well, since you didn’t pay the mortgage payments when he owned the home, you couldn’t claim it as a tax deduction. This is just one example. Be sure to go over the tax rules or ask one of the BIDaWIZ tax advisors.
Claiming The Standard or Itemized Deductions?
Still Married by Year End – No Divorce Decree
If you are “Married filing jointly”, then you can choose the standard or itemized deductions, just like any other year.
Divorced Prior to Year End – Divorce Decree
But if you are “Married filing separately”, then you have no choice but to itemize deductions if your spouse does — you wouldn’t be able to take the standard deduction. So why would you want to take the standard? Well, sometimes your itemized deductions aren’t as high as the standard which happens to be $5,700 for filing “Single” and $8,400 for “Head of household” for 2009 tax returns. If you are able to file as “Head of household”, you could take either the standard or itemize, it’s up to you.
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