Anyone a CPA or familiar with tax laws ?? (regarding divorce/filing status)

[lbrown1618]

My husband and I are divorcing and we expected to have it finalized end of Jan/beg of Feb 2011. We found out the other day that if we both agree, we can finalize early December...but we have to consider the tax implications. I don't know enough to decide whats best.

We both made roughly the same, maybe him 60%, me 40%. We live in Michigan and have two children 6y and 8y. We have always used TurboTax to file ourselves.

I have been told that if we finalize before the end of the year, we cannot file "married" of any kind for 2010. We would have to file single. And divide the deductions (taxes, mtg interest, each claim a child, etc).

If we finalize after the 1st of the yr, we can file 2010 as married. Everything would be the same as previous years. If we owe, we split the payment, if we get a refund, we split that.
In addition to that....is there a benefit/penalty to file as married/joint or married/seperate?? If we file married/seperate, how does that work? Do we each file on our own and if so, how do we split up the deductions? What is the difference between filing married/seperate and filing single??

[CW&M Mom]

Filing Status

Your marital status for tax filing is set as of the last day of the year. It depends on your marital status and your family status as of December 31. If you are divorced as of December 31, you must file as single taxpayers for that year, even if you and your spouse lived together as a married couple more than half the year.
If you are still married as of December 31, here's how it works: If you and your spouse lived in the same household and were not legally separated, you must file as married (either a joint return or separate returns). You may be able to file as Head of Household even if you were legally married on December 31 (see below).
To file as Head of Household, you must meet all these tests: You were unmarried or considered unmarried on December 31. You paid more than half the cost of keeping up a home for the year. A child or other qualifying person lived with you in the home for more than half the year for whom you or the other parent is entitled to claim the tax exemption.
You are considered unmarried if you were legally separated on December 31 or if your spouse did not live in your home for the last six months of the year.
On average (and there certainly are exceptions), the tax rates get higher in the following order (meaning I've listed the most advantageous rate first): Married filing jointly Single Head of household Single Married filing separately
Timing of the Divorce

Because the marital status of the parties for purposes of their tax return is set as of the last day of the fiscal year, a couple contemplating divorce near the end of the year should consider whether they would be better off making their divorce effective before the end of the year - allowing them to file as single taxpayers, or making their divorce effective after the end of the year - allowing them to file a joint return.
One caution about filing jointly. The less financially savvy spouse needs to understand that signing a joint return with his or her spouse exposes him or her to liability, even if he or she is not privy to all the calculations included in the return. There is a principle called the "innocent spouse" rule that allows a spouse to escape liability in a few cases. It is narrowly drawn, however, and should never form the basis for planning. Because trust is often at a low ebb as divorcing couples are preparing their final joint return, the less financially savvy spouse may decide to hire an independent accountant to review the return and its supporting documents before he or she signs it.

[motherofmolly]

your filing status is what it is at the end of the year. divorced means your status is either single or head of household -hoh depends on who gets the dependants...

something to consider...do you file long form? ie do you have a mortgage and real estate taxes that allow you to file the itemized deductions form? if this does not apply, then skip

if you guys are just doing married with 2 dependants, nothing else...do a ruff estimate of what will be the difference....an easy way to do this is use last years info (if everything is the same money wise)...figure what you would of gotten by yourself and 1 kid and him the same (assuming you are splitting the kid deduction)

it isnt hard to figure out...need help pm me

[tiger_fan3]

I am a CPA (also in Michigan). There is a lot going on in your question. Yes, if your divorce is not final until 2011, then you will have to file married filing joint or separate. If it is in 2010, it will either be single or Head of Household. Are you and your ex on good terms? If you are hoping to file as married filing joint on this return, remember that you will need to work out with him about paying if you owe anything and then trying to get your portion of the refund if you have any. You are signing a legal contract with someone that you don't want to be with anymore.

As for the kids, that is between you guys as to who claims the kids. If you have custody of the kids and they live with you most of the year (except weekends or whatever the custody arrangement is), then you will get to claim the kids. You have the option to let him claim one or both of the kids by signing a waiver each year. I have had some clients in the past that would let the ex claim the kids that year because they owed no tax or it wouldn't benefit them at all.

For the mortgage interest this year, it would depend on who's social security number is listed on the 1099.

If you file married filing separate this year, then you need to remember that if one spouse uses itemized deductions, then the other one will have to use itemized deductions even if the standard deduction would have been better. You also lose certain deductions if you file MFS.

If you want, I would be happy to run numbers for you for no charge if you supply me with estimated numbers. I can't post my website here for you to see my credentials, but you can PM me.