Determining your Maryland divorce filing status and how you will file your 2011 tax return is one of the most critical decisions that you will make early on in the divorce process.
In our Second Saturday class, “What Women Need to Know about Divorce,” I review the filing options that divorcing individuals have:
- If you have lived apart for the last six months of the calendar year, you may qualify for Head of Household (HH) status; you could alternatively file as Married Filing Separate (MFS), or continue to file jointly
- If you were legally divorced by 12/31, you can file Single or HH (if you qualify)
With the tax filing deadline being April 15th, why is this decision so critical at this stage of the process? If you have been a stay-at-home Mom and your husband files your tax return electronically, your right to file as you want and possibly your only negotiating leverage will be taken away from you in one keystroke!
Electronic Filing of your tax return does not require the signatures of both spouses. All that is required is the Personal Identification Number (PIN) of each spouse that was provided when you first filed electronically. So if your spouse needs for you to file jointly (to save taxes), your opportunity to negotiate this point is lost. You will also be liable for any additional tax, interest, and penalty that may be assessed by the IRS in the future.
What can you do to avoid this situation? Even if you have no income, discuss this situation with a CPA. You can then assess what your tax liability may be, and with your attorney, determine whether you should file MFS or HH now. This preserves your right to file and maintains your leverage to negotiate. Once the settlement is final, you can amend the return and file jointly, giving your spouse the tax savings that was originally asked for. The key to this tactic is that you can switch from MFS or HH to filing jointly, but you cannot switch from filing jointly to another separate status.
John Faggio is a Maryland Divorce CPA and Certified Divorce Financial Analyst™. He provides financial divorce services to domestic law attorneys, individuals, and couples in Howard, Anne Arundel, and Montgomery Counties.
Email or call John today at 410-988-7333 for an initial flat-fee consultation to put your divorce on the right path.