Ask the Expert: Tax filing options for a divorcing couple
After 30 years of marriage, my wife and I are divorcing. She has her own business, and I work for a major NYC telecommunications company. She filed for divorce in December 2021. We have lived together since then, but I’ve taken the responsibility of paying all household bills including the mortgage. What’s the normal process in filing our 2022 taxes while we go through the divorce process and I continue to pay all household bills?
Your decision to pay the mortgage and household bills is best addressed in your divorce settlement. As for your taxes, any couple that was married on Dec. 31, 2022, can file their 2022 tax return either as married filing jointly or as married filing separately.
The advantage of filing jointly is that your tax bill will almost certainly be lower. When you file separately, you're taxed at a higher rate, and you get fewer tax breaks. Your standard deduction is lower, and your potential itemized deductions are reduced by income phaseouts. That’s why married couples almost always choose to file jointly.
But there’s a downside for a divorcing couple. When you sign a joint tax return, each of you becomes responsible for paying the taxes on that return, and for any additional taxes, penalties and interest that may be levied. This means that if your soon-to-be ex refuses to pay his or her share, you're liable for the entire amount. It may not be the best choice if you have misgivings about your spouse’s honesty.
If you decide to opt for a joint tax return, your divorce settlement should, of course, spell out how you'll handle any tax liability or refund.
The bottom line
A divorcing couple should consult their tax advisers — as well as their lawyers — about their options.
