A divorce is going to change the way you've always done your federal and state income taxes, especially for the year immediately before your divorce is finalized. As long as you're still married on the last day of the year, you can choose the way you want to file your taxes. Applying the various tax laws that are in effect within your state, you'll have some decisions to make about filing jointly for one last time or by going the single route. Obviously, no matter how much animosity there is between you and your ex-spouse, you don't want to end up paying more in taxes just to spite your ex. You need to work out something equitable.
Generally, it will be to your advantage to file jointly if you can. This usually results in saving the most money. Of course, nothing is ever absolute, and you may need to do some figuring to find out which way would be the most beneficial. If you file separately, you have to be cautious about the way you decide who reports both income and withholding that was taken. If you don't have a prenuptial agreement saying otherwise, the income you earn prior to your separation is considered community income and must be reported equally by both spouses. Income earned after your separation belongs to the party that earned it.
You'll have to take into account the various properties that each of you received in your divorce settlement. For example, you don't want to claim only 50% of the income from a rental property if you, in fact, separately own the title to the entire property. Try and agree on items like separation date, the character of various incomes, and the allocation of tax payments when it comes time to have your tax documents prepared. If you can't agree, your attorneys will have to be brought into the mix to help work them out for you.
Keep in mind that any agreement made between you and your spouse can't be in violation of your federal and state laws regarding tax issues. Some of the areas where you need to pay close attention are the laws that pertain to incomes such as child support and alimony. Tax settlements don't have to be taxing if you follow the rules and agree to agree with your soon-to-be-ex. Your attorney or tax-preparer will be able to walk you through the steps so that you'll be able to submit perfect returns, even if you've never done them in the past.
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