Divorce is a difficult time for most for many different reasons. A common issue facing couples during divorce is tax issues, and if taxes are not handled properly by both sides it can lead to an IRS audit. Tax time can be stressful and confusing for anyone. Add on the issue of divorce and it can lead to a whole new host of problems, especially if both parties wait until the last minute, and one or the other is not willing to hand over tax information.
One question that comes up during the process is how to file; one can choose to file either married jointly or file separately. This can have important implications either way. If parties file jointly, they are responsible for the other person when it comes to taxes. On the other hand, it can get expensive to file separately if parties pay a CPA or private party to do their taxes for them.
Other issues that come up in tax filings are who may claim head of household and who gets the deduction for any children a couple may have. Generally, the head of household claim goes to the parent who has the children more than half of the year. However, parties have to be careful because they both cannot claim head of household on their taxes.
One major issue that divorced taxpayers generally face is when and where to file taxes, particularly with more complex arrangements. Since divorced couples rarely file or prepare their taxes together, this can get very tricky. This can be especially difficult if the IRS decides to conduct an audit of the parties. Family law attorneys recommend a specific and important strategy: file first and force the other person to react.
Source: “Divorced Couples Are Walking Right Into These Tax Traps,” Mandi Woodruff, Business Insider, Apr. 3, 2012