In the rush to gather receipts, statements and other financial documents so your accountant or financial advisor can help prepare your tax return, those in Fort Lauderdale, Boca Raton, Hollywood and throughout South Florida who recently had a divorce have another key consideration: When did the marriage end? This is an important consideration for personal and business interests alike.
Filing status for married or recently divorced couples is determined by their marital status as of December 31 of the tax year in question. So, if you were still married as of December 31, 2012, you can file a joint return by the April 15, 2013, filing deadline.
This could be the one last financial benefit of a now-failed marriage. Tax rates are lower for those filing jointly. In fact, many family law attorneys and divorce lawyers will advise their clients seeking divorce to wait until after December 31 to obtain a final judgment of divorce to take advantage of the lower rate available to couples filing jointly. Still, the date of the court's order granting divorce - not the date of filing - is the date effectively ending the marriage, at least for tax purposes.
Divorce and tax filing also raises other considerations. For example...
- Who gets any refund?
- If the individuals decide to file separately, who gets the mortgage interest or real estate tax deduction?
- Alimony is tax deductible, child support is not. Those receiving alimony must report it as income. Child support is neither taxable nor deductible.
- Even afterward, who claims children for dependency exemption? Generally speaking, the individual who pays more of the support for the child generally gets the dependency exemption. This can be a bargaining chip in divorce negotiations. After the divorce settlement is finalized, the head-of-household status cannot be bargained or negotiated away. The parent at whose home the children resides more than 50% of the time is head of household, according to IRS rules.
Does one or both spouses own a business that could affect taxable income? Moreover, if one spouse owns a business, the other may seek indemnification in case the owner under-reported income, misstated earnings, or took improper deductions.
Even without business interests, taxes and finances can be complicated issues. Your family law attorney or divorce lawyer may advise you to hire a forensic accountant for divorce litigation cases.
The Law Offices of Barry I. Finkel P.A., handles complex divorce litigation for a variety of clients, including high net worth individuals. As a divorce and family law firm, the practice serves the needs of the entire family. Established in Fort Lauderdale / Broward County, Florida, in 1992, and now in Boca Raton, the firm's lawyers provide trusted matrimonial counsel to clients facing turbulent times and unsettling circumstances. For a consultation or to schedule an appointment, please call 954-776-1414.