Mediator Matthew's October Divorce Speech

From about October 1 until the end of the year, divorcing families have to take a good, hard look at the choices they will make about their taxes for the coming year. You must be married as of December 31 of a given tax year to file your taxes as a married couple. This is the time of year when it is especially important to consider the tax consequences of your divorce, and to meet with the appropriate tax professionals, whether a tax preparer, a Certified Public Accountant, or a tax attorney.

Several big issues tend to come up at this time of year, particularly in families where there is a large disparity between the incomes of the husband and the wife. First, if the higher-income earner has had his or her income deductions figured throughout the year based on the assumption of filing jointly, his or her tax may be significantly higher at the end of the year when filing individually. Not enough tax may have been withheld throughout the year, and that higher income-earner may be hit with a big tax bill on April 15.

The second way that the higher income-earner may be affected adversely is if he or she has claimed the children as dependents for his or her withholdings throughout the year. If the lower income-earner has more parenting time than the higher-income earner, the lower income-earner will be the one who has a the legal right to claim the children as dependency exemptions unless both the husband and the wife make an agreement to the contrary. In that case, the proper amount of tax probably was not withheld throughout the year, and the higher income-earner will again face an increased tax bill.

Many of my clients choose to file jointly for the current year and finalize the divorce sometime the following year. What you do is up to you and your tax professional to figure out, and the comments I’ve made above may or may not apply to you, depending on the particular details of your situation.