Skip to main content

Divorce and Taxes: 6 Issues to Be Aware of - Issue #1. Marital Status

Image
By
There are two certainties in life: Death and Taxes. We've already written about how divorce and estate planning are interrelated, but what about divorce and taxes?

In all cases a divorce will affect some part of your tax return. In most cases there will be numerous changes in your income tax liability after your divorce and you should give consideration to what changes will take place because this could be a factor in determining the best divorce settlement for you. In some cases these changes may be complicated enough that your attorney should involve an accountant or certified financial planner to help analyze the different options. Our next five blog posts will explore the various issues raised by the interrelation of divorce and taxes so that you are at least aware of the issues to be on the lookout for.

Issue #1. MARITAL STATUS: The most obvious way that a divorce will affect your taxes is by changing your marital status. This is a change to your federal income tax return that will happen after every divorce case.

In Massachusetts, after the expiration of the Divorce Nisi waiting period (90 days from the issuance of the Judgment of Divorce Nisi) when the Judgment of Divorce becomes final you are officially divorced and you are no longer qualified to file a tax return as "married, filing jointly" or "married, filing separately". The key date for determining your tax year marital status is December 31. If your divorce nisi period crosses December 31, then you are technically still married in that tax year and must still file under a married status.

Obviously, marital status has a significant affect on your income tax liability and if you are scheduling an uncontested divorce hearing in the Fall you might want to consider whether it makes sense to schedule it early enough to change your status by December 31, or wait.

Click here to read Divorce & Taxes - Issue #2. Child Support v. Alimony.

Labels:

Comments

  1. Divorce AdviceMarch 14, 2011 at 7:30 AM

    It was great post, but i think different states different taxes

    ReplyDelete
  2. Kelsey & Trask, P.C.March 14, 2011 at 10:58 AM

    In response to Divorce Advice: The Nisi period described in the above post is specific to Massachusetts (though other states may have waiting periods as well). Although, the timing may be different from state to state on income tax returns, the change in marital status will affect your federal and state income tax return at some point. As indicated in our Disclaimer, to apply the law to the specific facts of your case you should consult with an attorney in your jurisdiction.

    ReplyDelete

Post a Comment

Popular posts from this blog

2024 U.S. Presidential Party Platforms - What are the policy positions that could affect families?

By
While the laws that affect family formation, marriage and divorce are often made at the state level, there are also many policies and laws at the federal level that affect families and children.  Just some examples from recent years that have impacted families in my mediation practice include changes to the federal tax laws (such as  the elimination of the alimony tax deduction ) and U.S. Supreme Court rulings on same sex marriage and reproductive health rights.  In just over a month, the United States presidential election will have a significant impact on these federal policies going forward, and could choose the next appointments to the U.S. Supreme Court as well. In 2016 and 2020 we shared what each presidential platform said about families and policy regarding family formation and dissolution, and below we'll provide you an update on the 2024 presidential platforms.  As Maya Angelou said, "When someone shows you who they are, believe them the first time."...
1 comment
Read more

Updating your Divorce Agreement Template - More Lessons from Cavanagh v. Cavanagh

By
We recently posted a lengthy review of the the Massachusetts SJC decision in Cavanagh v. Cavanagh (2002)  which included some recommendations for drafting divorce agreements, also typically called Separation Agreements.  The Cavanagh case is best known for it's clarification of how the courts should evaluate support calculations when a case may have both alimony and child support.  However, the case also contained numerous rulings that should make practitioners review their Separation Agreement templates and change some of the ways in which they may have previously drafted certain sections. In this post we'll share actual language from the Gray Jay Endeavors, LLC form Separation Agreement template which addresses each of the issues raised by the Cavanagh decision.  If you are a professional interested in purchasing the full Separation Agreement template, check out Gray Jay's  forms subscription which includes editable Massachusetts court forms and financial st...
Post a Comment
Read more

Massachusetts Family Court Financial Statement - Instructions & Best Practices

By
During a divorce, or other case in the Massachusetts Probate & Family Court that involves your finances, such as a child support case, you will likely be required to file a court form Financial Statement.  In Massachusetts there are two versions of this form: a "short form" if your income is under $75,000 and a "long form" if your income is $75,000 or more.  Many people find these forms confusing and we've compiled a list of helpful information for filling them out. First , to access the forms, the court has provided pdf or online versions here: Massachusetts Rule 401 Short Form Financial Statement (pdf) Massachusetts Rule 401 Long Form Financial Statement (pdf) There are also some basic instructions provided by the court explaining the sections of the forms and providing access to a Schedule A (for self-employed people) and Schedule B (for rental income): Massachusetts Rule 401 Short Form Financial Statement Basic Instructions Massachusetts Rule 401 Long F...
Post a Comment
Read more