D.I.V.O.R.C.E. And T.A.X.E.S.
June is typically the most popular month for weddings. Did you ever wonder if there is a divorce season?
I did. And I found out that just like there is a season for getting hitched there’s one for getting unhitched too.
As a tax attorney, I have a lot to say about divorce because it can be a lot more expensive than that outrageously expensive fairytale wedding. And there’s no open bar to help you forget the financial pain!
Some researchers say that January and very specifically the first Monday of the New Year is when the majority of people file for divorces.
In fact some attorneys call it “Divorce Monday”! There is another group of researchers that disagree. They have found that between 2001 and 2015 divorces peaked during the months of March and August.
For any of the scenarios, be it January, March or August, there are a number of reasons that make sense. They mostly have to do with families. Getting through the holidays seems to correspond to that first Monday of the New Year tactic. March might have something to do with Spring break or taxes. And August comes into play because parents want to get going before school starts especially if it affects where the kids go to school.
The Taxing Part of Divorce
If separation or divorce seems imminent, it would be wise to consult with a Enrolled Agent or Tax Attorney before finalizing any agreements. Failure to consider the complex tax issues surrounding these major life choices can have a long-term financial impact. And, keep in mind that no matter when you file for divorce whether January, March, August or any other of the 12 months, your filing status will depend on whether your were still married on the last day of the preceding year.
Some of the important areas that affect your taxes include whether you file jointly or separately, alimony, community property, and whether or not there may be any spousal buyout considerations. Of course, if there are children, who gets custody and who claims the child as a dependent on tax forms needs to be agreed upon. If you are married but not living together, you can choose to file as Head of Household if you lived apart from your spouse at least the last six months of the year, and maintained a home for yourself and your dependent child for more than half the year and paid more than half the cost of that home.
But Wait, There’s More
At the risk of sounding like an endless infomercial, I do have to say these are just the basics I’ve outlined. Taxes are complicated under the best of circumstances. And they get even more complex when two people start trying pulling apart and each one wants to benefit at the expense of the other.
Remember that happy wedding season? This is the season of divorce. No one is registering to shower you with gifts and pretty much no one is smiling. Understanding the tax implications is part of solid financial planning as you move forward with your separation or divorce.