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Divorce, Dollars, & Debt: Taxes and Divorce: Filing Separately:
If agreement on the filing status cannot be reached, it is accepted that the proper thing to do is to file separately. The reason for this would be two individual, separate returns can be amended to form a joint return anytime within three years. However, you cannot change a joint return into two separate individual returns at any time. Another advantage to filing separately is that you would not be held accountable should your spouse misrepresent any income or expenses on their tax return. If you do file jointly, you could be held accountable for any and all back taxes, interest, and/or penalties with respect to that joint return.
When filing a separate return, you will of course report only your income, exemptions, credits, and deductions. If your spouse did not work, you may claim an exemption for him/her. This, however, is slightly different in the Community Property States. Generally speaking, in these states, income earned and assets acquired during the course of the marriage are theoretically owned 50-50 by both spouses and is therefore considered to be "community property". Before choosing to file separately in a Community Property States, it is best to seek the advice of a tax professional. In addition to claiming separate income and deductions, you will most likely have to report half of the "community income" and claim one-half of the "community deductions". In determining just what is a community deduction, the rule of thumb would be if the expense in question was paid for out of community funds, then each spouse will file half the amount on their individual tax return.
With regards to claiming children as dependents in Community Property States, the exemption of a single child must be wholly claimed by one spouse or the other; the deduction may not be split in half If you have multiple children, two for example, it is possible for each spouse to claim one child each. However, if both of you attempt to claim the same child, the IRS will take a dim view and not allow the exemption on either return.
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