Let me start this blog by stating that this blog entry is not to be considered tax advice. Everyone is advised to seek the advice of an appropriate tax professional, such as a CPA, regarding tax questions. This blog, however, is intended to identify some issues and language to be considered when trying to address the tax issues that commonly present in divorces. These matters should be considered when planning, drafting and negotiating a divorce settlement with your divorce lawyer or mediator.
Each case and agreement is different, so the following is intended to be illustrative only. Tax filing status is a big consideration when divorcing. Some common language in a settlement agreement might provide that the husband and wife can file taxes jointly or separately if they so choose for any tax year that they are still married at some juncture during the year. In that event any tax refunds received are often designated by the agreement as the Separate Property of the recipient spouse. The settlement can also state that if both sides agree to filing jointly, they may do so only so long as they are able under the tax laws. In what proportion any refunds or taxes owed should be discussed such as whether everything (refunds or amounts due) is going to be shared equally or in proportion to the respective contributions towards taxes or responsibility for any shortfall. Continue reading ›