Last Updated on
Your filing status during a legal separation depends on many different factors. First, the IRS uses your marital status as of December 31 of the tax year you and your spouse plan to file. If you are married on that date, but are thinking of separating, the IRS still views you as married.
Therefore, you and your spouse can choose between filing jointly or separately. Filing for a separation or divorce that is not finalized by the end of the year means you must use the Married, Filing Separate status.
Coming to an Agreement with Your Spouse
If it is possible to reach an amicable agreement with your soon-to-be ex-spouse, you can file Married, Filing Jointly if this status benefits the both of you. Speak with an attorney and tax advisor about the pros and cons of pursuing this option.
Typically, you may have a lower tax burden if you file jointly. This depends on factors such as:
• Income of both spouses
A primary disadvantage to filing jointly while going through a divorce is you and your spouse will be equally liable for the return. This includes any interest and penalties, and tax deficiencies. However, one way to possibly protect yourself against this is with a Tax Indemnification Agreement. This document is an agreement that your spouse will repay you for their tax liabilities.
Protecting Yourself during Divorce Proceedings
In addition to an agreement for handling tax liabilities, you can also protect any refunds you may receive. The separation agreement should outline the way a refund is issued. If the IRS sends a check, make sure it is in both names.
Absent this, you should have a written agreement that the recipient of the check will pay the share to which the other spouse is entitled. Direct deposit refunds should go to a joint account. Also, keep in mind that you are not obligated to equally share the tax liability or refund. Do what is fair and consistent with how other marital property is divided.
Acceptable Filing Statuses When You’re not Filing a Joint Return
If your legal separation is final by December 31, you can file Single under IRS rules. If your separation decree is not final by this date, but you are living separate for six months or more during the tax year, you may file as Head of Household. This is allowed when you are supporting a child.
Requirements to File as Head of Household
All of the following must be true for you to file as Head of Household during a legal separation:
• Your home was the primary residence for at least one child, stepchild or foster child for more than six months.
• You can claim dependent exemption for the child, stepchild or foster child.
• You were financially responsible for more than 50% of the cost to maintain your home. This must have occurred during the tax year in question and cover rent or mortgage, taxes, insurance utilities and food.
Your spouse must file as Married, Filing Separately if you choose the HOH filing status.