The IRS uses special filing rules to determine whether spouses can file taxes jointly after divorce. For federal tax purposes, divorce includes only the legal dissolution of marriage between a man and a woman by a state’s court. Thus, same-sex registered domestic partners who dissolve their partnerships cannot file their taxes jointly, even though they were legally married pursuant to their state’s domestic partnership laws.
Married Filing Jointly
The IRS allows divorced spouses to file their taxes jointly if they are not legally divorced by December 31, the end of the tax year. Since most states allow divorces from bed and board or legal separations without an official divorce decree for insurance purposes or for a spouse’s religious reasons, these taxpayers may file jointly if they do not obtain a legal separation order by the end of the tax year. Taxpayers who obtain a legal divorce decree or legal separation order before or on December 31 of the tax year may not file their taxes jointly. However, taxpayers who are not legally divorced or separated may use the permissible tax laws to file their taxes as married taxpayers filing individual returns, instead of choosing to file taxes jointly.
Since the IRS provides single filers who file as head of household with a larger standard deduction than those who file taxes using a single filing status or as married taxpayers filing separately, many divorced spouses choose this filing status. The larger standard deduction reduces the taxpayer’s tax rate and tax liabilities without requiring the taxpayer to itemize deductions. To file as head of household, taxpayers need to file a separate return, pay for over half of the costs associated with upkeep of their homes and must have a qualified child living with them for over half of the tax year. Additionally, the IRS requires that spouses do not live together for at least six months out of the tax year. Taxpayers who choose to file individual tax returns although they had the option of filing jointly should know that their tax rate would be higher as a single filer than it would be for spouses filing jointly. The IRS also prohibits the use of some credits by individual filers such as the earned income credit and educational tax credits. Although they may be able to take advantage of other tax credits, the IRS reduces the credit allowance for several credits, including the first-time homebuyer credit, reduces the capital loss deduction limits and reduces the child tax credit limits.
Taxpayers who may not file joint tax returns are those that the IRS considers unmarried for the entire tax year. These include taxpayers who obtain their final divorce or separation decrees by the December 31 cutoff date.
Implications of Filing Jointly
Divorced taxpayers who may file their taxes jointly are individually and jointly responsible for each other’s tax debts. The federal tax laws allow the IRS to pursue tax liabilities from one spouse even though the divorced spouses obtained a court order allocating responsibilities of debt repayments and tax liabilities to the other spouse. The legal joint and several liability rules allow the IRS to satisfy their tax delinquencies for tax debts and tax returns filed before the spouses obtained a divorce decree. Note, however, the IRS provides some equitable relief options to some spouses who request equitable spousal tax relief using the innocent spouse rule or other equitable tax relief laws.
- tax forms image by Chad McDermott from Fotolia.com