Tax Consequences of a Divorce

An often overlooked area, are the tax consequences of a divorce whether contested or not. Generally federal regulations are the ones to consider. Virginia and other states might have various other considerations to consider, but this information is intended to assist with the federal portion on the return. The filing status is one of the first factors to decide upon.

Married filing jointly is usually best reserves for those couples who filed an uncontested divorce and ended their relationship on amicable terms. This status also tends to offer the largest tax savings. This often results in the highest deductible and a less complicated return. If children are involved filing jointly only makes the entire process easier. If legally possible this is my suggestion as the best filing method.

However, there are many situations, where the best decision is electing to file a return as married filing separately. This is often the case in contested divorces or if you cannot locate your spouse and did not live with your spouse, but you were married throughout the previous tax year. As an example, Virginia allows one spouse to file an uncontested divorce after first look for the individual by submitting a search notification by publication. Under these circumstances you have no idea how your spouse might file their return. Therefore it is smart to select a filing status of married filing separately. Keep in mind this will increase your tax burden and obligations to the federal government. Nonetheless, it is a much better alternative than risking an audit and attempting to deceive the IRS.

Generally, I would not advise to elect filing utilizing the single status until the next tax year. As always, keep in mind I am not a Virginia lawyer or tax attorney, and it is suggested to first seek the assistance of both for making any decisions. Each individual’s circumstances vary and it is thus important to obtain specific advice for your situation from qualified individuals. Hopefully, this information serves as a an excellent starting place, to help people know important questions to ask their attorneys and tax professionals.

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