It's difficult enough to think about taxes
under normal circumstances. Finding yourself amid a divorce action can make
this task even more daunting. A little planning, however, may ease this burden.
Consider, for example, the following ideas about your tax filing status if your
divorce isn't final by December 31, 2014.
Advantages of filing a joint tax return. It
is often better, tax-wise, to file a joint return because of certain benefits
that are available to joint filers. Benefits such as the earned income credit,
the credit for the elderly, and certain other tax credits and deductions are
reduced or unavailable for married taxpayers who file separate returns.
Advantages of filing a separate tax return.
Filing a separate return may make sense in a situation where your spouse isn't
cooperating with you. This could especially be true if your bank requires a tax
return before they'll approve a loan. Another reason for filing a separate tax
return may be that you suspect that your spouse has unreported income. Filing
separate returns in these situations may be a practical solution.
Sometimes it makes sense to file a separate
return because you'll owe less tax. An example is where medical expenses are
not deductible because your joint income is too high. With a separate return,
you may be able to claim a deduction.
Can you change your mind about your filing
status after your return has been filed? You can change from separate to joint
filing status by filing an amended return. However, once a joint return has
been filed, you may not change to separate filing status after the return's due
date.
The bottom line: You should calculate your
tax liability under both joint and separate filing choices to see which results
in a lower tax. Numerous other tax and financial issues could be affected by
your divorce. If you'd like tax planning assistance, give us a call. We can
work with your attorney to help you make informed choices that take taxes into
account.
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