Divorcing presents a host of practical problems, not the least of which might be how to file your taxes. In most cases, the Internal Revenue Service considers you legally married until your divorce is final. This limits your filing options and – depending on where you live – you might still have to claim some of your spouse's income and pay taxes on it, even if you file a separate return.
Unless your divorce is final by December 31, your only filing options are a separate married return, a joint married return or – in a few cases – a return as head of household. It doesn't matter if you and your spouse are actually living apart. You may not want to file a return with your soon-to-be ex for emotional reasons, but speak with a tax professional before you let your heart rule. It's usually more advantageous financially to file jointly while you still can, and unless you're legally separated, you can do so until your divorce is final.
A wrinkle exists in the usual rules if you and your spouse have legally separated – you have a court-ordered decree or judgment that directs how you live apart. Having a signed separation agreement and living in separate households doesn't make you legally separated according to tax law. In this case, the IRS treats you as divorced and your filing options reverse. You can't file a joint married return or a separate married return. You can only file as a single taxpayer or as head of household.
Head of Household Status
If you can qualify as head of household, this typically offers more tax benefits than either a single or separate married return. You and your spouse cannot have lived together the last six months of the year. You must have a dependent, such as your child, who lived with you for at least half the year. You must have paid more than half of your household's expenses. If you meet these requirements and you elect to file as head of household, your spouse has no choice but to file a separate married return -- or, if he qualifies, as head of household -- if you're not divorced yet.
What to Claim
If you decide to file separate married returns, your next hurdle is to determine who can claim what. Income is usually easy – you report what you earned and your spouse reports what she earned. The situation is a little less clear with deductions, and you may need the help of a tax professional to figure it out. For example, if one of you decides to itemize rather than using the standard deduction, you both must do so. If you do itemize, you can usually split medical deductions 50-50 if they were paid for from a joint account, but the IRS treats property taxes and other home-related deductions differently. You can only claim these deductions if you personally paid for them – the payments cannot have come from joint funds. If you have a child, you both can’t claim him as a dependent. If you have two children, however, you can each claim one.
Community Property States
If you live in one of the nine community property states – New Mexico, Arizona, Texas, California, Nevada, Washington, Idaho, Wisconsin or Louisiana – the rules for reporting your income and claiming deductions change. Community property states treat all income as earned by both of you, so you must therefore divide it 50-50 on your separate returns. For example, if you earned $150,000 and your spouse earned $30,000, she must report $90,000 and you must as well. The same holds true with most available tax deductions.
Beverly Bird has been writing professionally for over 30 years. She specializes in personal finance and w, bankruptcy, and she writes as the tax expert for The Balance.