Many spouses who have made the decision to divorce would agree that it can be a difficult time. Most of the issues that are brought up among divorcing Massachusetts spouses are property division and child custody. It may be vital for spouses to understand that divorce can also have tax impacts.
Spouses who file taxes as married but filing separate can face higher taxes. In these situations, the spouses must choose whether to take the standard deduction or to itemize deductions. One spouse could get nothing while the other gets a mortgage interest deduction for making house payments. In addition, both spouses could lose the Lifetime Learning Credit and the American Opportunity Credit.
If spouses are still married at the end of the tax year, they can still file married filing jointly, and that can come with some tax benefits. However, this will not safeguard spouses if there is a tax liability. Even if there is a marital separation agreement, the IRS will still hold both spouses responsible for any tax liability, and if it's not paid, wages could be garnished. On the other hand, either spouse may be able to file as head of household and enjoy tax benefits if one or the other meets certain requirements.
Filing taxes can be a burden for spouses who have filed for divorce but are still legally married. This is especially true if spouses are unable to agree to file as married filing jointly. Massachusetts spouses who are too overwhelmed with figuring out tax liability may seek out a tax professional. The professional will be able to determine if there are any tax liabilities and give options on the best ways to file.
Source: foxbusiness.com, "Divorce and Taxes Can Be Complicated", Bonnie Lee, Dec. 2, 2014