Taxes can be complicated on their own, but when you mix in your Maryland divorce, things can get even more frustrating. To ease the burden of filing taxes when divorcing, it’s a good idea to have the guidance of an Anne Arundel County divorce attorney.
Filing Taxes When Divorcing in Maryland
When filing your Maryland divorce you’re probably not considering how this change in your life will affect your taxes, but it definitely will. Not only does Maryland divorce impact your income and assets, but it’ll also change your filing status as well. There are 4 ways to file and each one considers how you’re classified on December 31st.
If your Maryland divorce is resolved prior to December 31st you can file as single. You must be classified as legally separated or completely divorced to file as such, just as you would for filing as head of household. Otherwise, if you’re filing taxes while divorcing, you must file as married filing jointly (MFJ) or married filing separately (MFS).
Filing taxes while divorcing, when you’re still in the settlement process, results in a classification of either MFJ or MFS. MFJ is the most common status and it means you’re still filing joint taxes as if you were still married on the last day of the year. This is regardless if you were living together or not and it requires your spouse’s signature on the tax forms. MFS can be a higher tax bill, but it may be your only option if your spouse refuses to sign a MFJ filing.
Filing as head of household can be done only when all of the following apply:
- you and your spouse have lived apart for at least the last 6 months of the tax year;
- you each file a separate tax return;
- you paid more than half the costs for the upkeep of your home during the tax year;
- your home was the main residence of your children for more than half of the tax year; and
- you can claim your child as your dependant, under the rules for children of divorced parents.
If you’re ever in doubt of your status for filing taxes while divorcing, an experienced Anne Arundel County divorce attorney can help provide you the answers you need.
Know How Your Maryland Divorce Settlement Is Taxed
Child custody and child support payments are some of the major factors in the confusion of filing taxes when divorcing. The IRS is concerned about your income and assets only and doesn’t pry into who spends more time and resources on your children. Therefore, when claiming dependants, you must work this out with your spouse in your Maryland divorce settlement.
Many times your Anne Arundel County divorce attorney will suggest you split the claiming of children as dependants on individual tax returns between odd and even years. This is something that needs to be outlined and agreed upon in your Maryland divorce agreement to avoid potential conflict in the future. Still, the IRS treats claiming dependants as a first come, first served basis, so be cautious.
Also be aware that alimony is taxable as income on your federal tax return, but child support isn’t. This means when your spouse classifies more of the money they pay you as alimony, you’ll get hit with more taxes. In this situation, it may be beneficial to request more tangible assets such as the family home in lieu of alimony payments. The home isn’t taxable, but monthly alimony payments are.
There are more considerations to make when filing taxes during divorce in Maryland. It’s best to consult with experienced professionals in both matters to avoid harming both your financial history and your Maryland divorce case. A professional Certified Public Accountant can help with filing taxes during divorce, and an Anne Arundel County divorce attorney can help with settling your Maryland divorce case.
Contacting an Anne Arundel County Divorce Attorney
The Maryland family law attorneys at Jimeno Gray understand the nuances of divorce, child custody and alimony in Maryland. Our Anne Arundel County divorce attorney team is ready to help you with your family law needs. Contact us todayfor a consultation – 410-590-9401.