Check the Calendar for Marriage Status
Key Points
  • Filing married, jointly can save you the most money when you are filing your income tax returns as long as you are married as of the last day of the year (December 31); even if you have been separated.
  • If any taxes are due, even if you are getting a divorce, you and your spouse will be responsible, jointly, to any tax liability; same goes for any refund you and your spouse are entitled to.
  • If your spouse manages the money throughout the marriage and files the income tax returns, make sure in the wake of a divorce you have not just signed the returns because your spouse said so; know what you are signing when you sign income tax documents.

One of the most important tax decisions that every divorcing couple makes is filing joint or separate returns. Separated but wed couples may file joint returns. Divorcing couples often remain legally married for some time - months, at least - until their divorce becomes final. For example, a couple separates in the spring, decides to divorce in the summer and sets to working on the property settlement in the fall, but is still legally married on Dec. 31. This divorcing couple may:

  • file jointly (called "married filing jointly");
  • file married as separate people (called "married filing separately"); or
  • under certain circumstances, file as single (when they are "deemed unmarried" or "head of household")

For wealthy couples, tax considerations may mean an extensive analysis that considers the incomes and deductions of both spouses, the number of dependents, tax credits, applicable tax rates and contributions already paid to avoid penalties. However, most middle-income couples find it advantageous to file jointly, and they can file jointly if they are married as of midnight on the last day of the tax year, Dec. 31. Thus, a couple who are married on the last day of a calendar year may file jointly even if they are permanently separated in anticipation of a divorce. Even if the divorce was finalized between Jan. 1 and April 15, a couple are still married when it comes to filing the previous year's taxes. If, however, the divorce became official in December, the couple cannot file as married even if they were for most of the year.

Despite their marital strife, most couples opt for joint filing because "married filing jointly" results in a lower total tax bill than any of the other options. If they file jointly, both of them are responsible for the taxes due. Each spouse is responsible for the entire debt because married couples have joint and several liability. Joint and several liability means "both spouses are each entirely responsible for the return and the tax liability and its tax obligations."

The IRS can go back several years and audit formerly married spouses who are now divorced. A married couple is liable for taxes for the years they were married. A divorce ends a person's obligation to a former spouse after the marriage is over. A former spouse is not liable for current taxes, just the taxes of the years when he or she was married. In general, the IRS ignores any agreements between the spouses about responsibility for taxes; if a deficiency is found, the IRS can pursue either or both spouses for the back taxes and any penalties. Women are often at a disadvantage here because in many marriages men manage the money and wives often sign what their husbands tell them to.

The Innocent Spouse, Section 434(c)(1) of the Internal Revenue Code, protects an "innocent spouse" from tax liability when:

  • a joint return was filed;
  • the return contained a "grossly erroneous" error;
  • the innocent spouse can establish lack of knowledge, and
  • in light of all the facts and circumstances it would be "inequitable" to impose the tax on the innocent spouse.

A tax attorney or accountant should be consulted, when, for example, a spouse attempts to cheat on his/her taxes by not claiming income or being less than honest about deductions. The "innocent spouse" must be able to prove that he/she was unaware of the spouse's actions so that he/she cannot be held responsible for them).

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