When a couple is divorcing, the emotional and legal complexities are often compounded by complicated financial questions—including those involving taxes. One common concern is whether spouses who are in the process of getting divorced in New Jersey can still file a joint tax return. This question is particularly important because the decision can have significant implications for tax liabilities, refunds, and legal responsibilities.
Here, we’ll explore the federal and state rules governing joint tax filings for divorcing couples in New Jersey, the benefits and risks associated with filing jointly, and key considerations for spouses navigating this sensitive financial decision.
It’s important to note here, however, that the following is general information. You should always speak with your own accountant and divorce lawyer for guidance for your specific situation.
Eligibility for Filing a Joint Tax Return During Divorce Proceedings
Whether you can file a joint tax return depends not on how close you are to divorce, but rather on your marital status as of December 31 of the tax year in question.
Federal Guidelines
Under IRS rules about filing taxes during divorce, you are considered “married” for the entire year if you are legally married on the last day of the year. This means that even if divorce proceedings are well underway, as long as the final judgment of divorce has not been entered by December 31, you and your spouse can choose to file a joint return. Alternatively, you may each file as “married filing separately.”
New Jersey Guidelines
New Jersey generally mirrors the federal definition of marital status for tax filing purposes. So, if you were still legally married on December 31, you may file a joint state income tax return if you filed jointly on your federal return. New Jersey requires that married couples use the same filing status as used on their federal return.
There are also residency intricacies related to filing for spouses in New Jersey that your tax advisor can counsel you about. For example, if one spouse is a non-resident and does not have New Jersey-source income, a joint return may not be appropriate.
Benefits and Risks of Filing Jointly During Divorce
There can be strategic advantages to filing jointly even during a divorce. However, those advantages must be weighed against potential legal and financial risks.
Potential Benefits
- Tax savings: Joint filers generally benefit from higher income thresholds for various tax brackets, standard deductions, and tax credits, such as the Earned Income Tax Credit or the Child and Dependent Care Credit.
- Filing simplicity: Filing a single return can be less complicated and may result in a quicker refund.
- Unified strategy: If you and your spouse are cooperative with each other, you can coordinate deductions and income reporting for a more efficient outcome.
Possible Risks
- Both spouses are liable: When spouses file jointly, both are liable for the entire tax obligation, including any underpayment or penalties. If one spouse fails to report income or claims improper deductions, both of you may be held equally responsible.
- Future legal disputes: If divorce negotiations become contentious, agreeing to share a tax return (and potentially a refund) can become a source of friction.
- Refund allocation issues: Determining how a refund will be divided can be problematic. Family law attorneys often recommend a written agreement outlining the distribution of any refund to avoid disputes.
Best Practices for Divorcing Couples Considering Joint Filing
If you and your spouse are contemplating filing a joint tax return while your divorce is pending, it’s crucial to proceed with care and get professional guidance. By doing the following you can help ensure that filing jointly makes the most sense for your situation and reduce the risk of problems.
Consult a Tax Professional and Family Law Attorney
Before filing jointly, speak with a tax advisor who can assess your financial situation and identify any red flags. Likewise, your family law attorney can help you understand how the filing choice may impact divorce proceedings, particularly with regard to property division and alimony, if that is a concern in your divorce.
Draft a Written Agreement
If you choose to file jointly, you can protect your own interests by having your attorney draft an agreement detailing who is responsible for preparing and submitting the return, how the refund or liability will be divided, and how disputes will be resolved if any post-filing issues should arise.
Look into Eligibility for Innocent Spouse Relief
If you have concerns about your spouse’s financial behavior or tax honesty, explore whether you might qualify for innocent spouse relief under IRS guidelines. This could shield you from liability for your spouse’s errors or fraud on the joint return.
Consider Filing Separately
In some cases, it may be safer or even financially more strategic to file separately. Although you might pay slightly more in taxes, you can avoid the entanglement of shared liability and preserve your own financial standing. Your divorce attorney and accountant can help you determine if filing separately is the best option for you.
Reach Out to An Experienced New Jersey Attorney for Help
Navigating the decision to file a joint tax return while going through a divorce in New Jersey is not straightforward. You must weigh the financial benefits against potential complications in both tax areas and divorce proceedings. The safest and most strategic approach is always to consult both your tax professional and your family law attorney for well-informed guidance.
If you’re currently divorcing and considering filing jointly with your soon-to-be-ex spouse, our law firm is here to help. Once we learn about your situation, we can help you understand how a joint filing may positively or negatively affect your divorce.
At [MFR] Men’s & Fathers’ Rights Divorce Lawyers, located in Hackensack, we focus exclusively in advising clients in complex family law issues, including those involving financial concerns. To speak with an attorney in a confidential consultation, call our office today at (201) 880-9770 or use our contact form.
