How to File Your Taxes When You're Getting a Divorce

If you’re in the middle of a divorce, you can file a joint return only if you're still married at the end of the tax year and both of you agree to file together. On your return, you would check the box "Married Filing Jointly.” The other option would be to file as "Married Filing Separately."

A temporary order relating to child support, alimony, or child custody doesn't change your marital status for tax purposes. But if your divorce is final by December 31, you can’t file jointly with your ex-spouse. You must file as either “Single” or “Head of Household.”

Should You File Jointly or Separately During a Divorce?

In most cases, filing jointly means a lower tax bill, but not always. Your tax bill depends on each spouse's income, deductions, and credits. The main downside of filing jointly during a divorce is that both spouses are equally responsible for all taxes, interest, and penalties on that return. You can protect to some extent with a Tax Indemnification Agreement (more on that below).

The IRS may also allow relief to a spouse who filed jointly but didn't know about errors or underreported income. The IRS offers three types of relief:

• innocent spouse
• separation of liability, and
• equitable relief.

(IRS Publication 971, Innocent Spouse Relief.)

Can a Spouse Be Forced to File a Joint Tax Return?

Spouses going through a divorce can’t use tax filings as a bargaining tool. In most cases, both spouses must agree to file a joint return. If you’re legally married, the IRS allows you to file jointly but doesn't require it. A court will not order unwilling spouses to file a joint return.

The IRS requires both spouses to sign a joint tax return. If one spouse doesn't sign, the IRS will likely send it back to be fixed.

How to Protect Yourself From Tax Liability in a Divorce

If you and your spouse agreed to file a joint tax return, your divorce settlement agreement or judgment should say how you'll handle any tax liability or refund.

If you expect a refund check, make sure it's made out to both spouses, or get a written agreement that the person who receives it will pay the other their share within a set time.

If the IRS sends a direct deposit refund, ask that it go to a joint account, or set up a written agreement about splitting the funds. You don't necessarily have to split the refund equally, just be sure you have a clear written agreement.

Some divorcing couples include a tax indemnification agreement in their settlements. Indemnification agreements are written contracts between spouses where one or both spouses agree to be responsible for specific tax liabilities. For example, let's say one spouse prepares the joint tax return. The other spouse might ask to be indemnified (shielded) from any penalties or interest that may arise from that return. But note that these agreements aren't binding on the IRS. The IRS can still pursue either spouse for the full amount owed, regardless of what the divorce agreement says. If that happens, the indemnified spouse's remedy would be to sue the other spouse for breach of contract.

How Do I File as Head of Household During a Divorce?

If you’re legally married at the end of the tax year, you can still choose to file separately. Your options are “Married Filing Separately” or “Head of Household,” depending on your situation.

Filing as head of household has some advantages. For example, you might be taxed at a lower rate and qualify for credits like the dependent care credit and the earned income credit.

To file as head of household, all of the following must be true:

• you paid more than half the cost of maintaining your home for the year (rent, mortgage, taxes, homeowners' insurance, utilities, and food eaten in the home)
• your spouse didn't live with you during the last 6 months of the tax year
• your home was the main home of your child, stepchild, or eligible foster child for more than half the year, and
• the child qualifies as your "qualifying child" or "qualifying person" under the IRS rules.

If you file as head of household, your spouse must file as married filing separately. Once your divorce is final, you may still file as head of household if you pay more than half the cost of maintaining your home for the tax year and your children live with you for more than half the tax year.

(IRS Publication 501, Dependents, Standard Deduction, and Filing Information.)

How Does Legal Separation Affect Your Tax Filing Status?

If you and your spouse stopped living together and are leading separate lives, your tax filing status won't change. You're still considered legally married for tax purposes until a court officially ends your marriage.

Legal separation is a formal court process available in some states. If a judge finalizes your legal separation before the end of the tax year (December 31), the IRS might let you file as "Single" or "Head of Household" instead of "Married," depending on your state's laws.

(IRS Publication 504, Divorced or Separated Individuals.)

Get Help With Divorce Tax Issues

Taxes during and after divorce can be complicated. For help understanding these rules and tax rules related to issues like alimony and child support, talk with a tax advisor, divorce attorney, or preferably both.