In addition to emotional pain, many divorced or separated people in Maryland experience the pain of dividing assets, negotiating living arrangements, child custody and visitation schedules, and perhaps much more. Most people find tax time tedious at the best of times, but people who are newly separated or divorced may, especially, wonder about the tax implications of their new status. Here are a few tips to keep in mind to avoid future complications.
Consider filing status and name
Even if separated, a married person who has not become legally divorced before the end of the tax year for which the return is due will continue to be treated as a married person by the IRS. People in this position can choose to either file their return as a married person jointly with their spouse or file separately as a married person. To avoid potential complications later, many couples choose to file separately, particularly if they suspect their spouse of underreporting income (perhaps as an attempt to influence divorce action later), although married couples who file separately may lose out on some aspects that lower tax liability. As well, many separated people look forward to changing or removing their married name, but those who file their tax return under their new name before it is legally changed can cause delays.
Decide in advance who will claim children
Separated parents who choose to file separate returns should consider who will claim the children on their tax return. In most cases, a parent with sole physical custody is entitled to claim the child, but other arrangements may work out better for some (for example, a non-custodial parent may have a higher income and, therefore, greater tax benefits). In any case, parents should try to agree on a course of action in advance to avoid complications with the IRS that will likely occur if both parents claim their children as dependents.
With all the areas requiring examination, evaluation and negotiation during the separation and divorce process, many people do not think about what they need to know at tax time. Armed with a few tips, they can avoid potential complications later that will certainly only add to the stress of the divorce process. Many Maryland couples seeking help with separation and divorce turn to an attorney experienced in the area of family law.