How to File Taxes When You Plan to Divorce
Taxes are already complicated enough. If you’re in the midst of a divorce or planning to divorce within the year, how do you file taxes? Should you file singly? How will your shared assets be reported? Will you get hit with tax penalties for separating your marital accounts?
A tax professional can answer these questions and help you optimize your tax return strategy. But while you’re here, let’s talk about tax season prep and how you can empower yourself during the process.
Gather All Tax Documents for Shared Assets Pending Divorce
We’re not tax professionals — we’re family law attorneys. And as legal professionals, we know the importance of documentation. To file your taxes accurately and optimally, you need all the W-2s, 1099s, and earnings statements that apply to your household. If you own a business (whether or not your spouse co-owns it), that includes profit-loss reports, cash flow statements, expense logs — you name it.
What if you’re going through a divorce and your spouse usually kept all these records? Or you’re in the middle of moving house and genuinely don’t know where they are? Tax filing can feel like a massive hurdle during life transitions, but proactive diligence now can save you headaches later.
So, take the time to gather every bit of financial documentation that you may need. Here are the most common:
- W-2s: your annual income as regular employee
- 1099-Bs: income from selling securities, e.g. stocks and bonds, including from joint investment accounts
- 1099-DIVs: dividends from investments, including shared assets
- 1099-INTs: interests from savings accounts, including joint bank accounts
- 1099-NECs: Non-Employee Compensation, issued to independent contractors. Similar forms include 1099-Ks and 1099-MISCs for online income or payments for gig work
- Form 1095-B: your health insurance coverage and any tax credits your household used
- Account statements and transaction histories: not strictly required for tax filing, but helpful if you need to calculate your income and expenses manually
- Documentation of any property sale or acquisition, especially for purchases made with your spouse or using community funds
Employers and firms are required to mail you any earnings statements. But if you moved house or have a spouse who intercepted your mail, you may not have the physical documents. Fret not: even if you don’t have paper copies, you can usually find them by logging into your account and looking for the “Tax Documents” section. Some entities also email you these forms or send you a secure link to access them.
Once you obtain documents, keep them in a safe place. This can include a secure physical location (a safe, a locked room or briefcase out side the marital home) or digital storage (e.g. password-protected, encrypted drive). Or better yet, both. Scan your physical tax documents or simply snap a photo of them, and print out digital documents.
See also:
- Can I Open My Spouse’s Mail During Divorce?
- When the Numbers Don’t Add Up: Spotting Hidden Assets in Your Divorce
Get into a Strategic Mindset for Tax Filing During Divorce
Even if you’re not yet divorced, can you file separately? While your situation is unique, the short answer is yes: the IRS allows married couples to file separate taxes. However, in a community property state such as Texas, your tax liability may be greater if you file separately while married. Also, certain tax credits, including the Child and Dependent Care Tax Credit, may be unavailable to married couples filing separately. Consult with a tax professional to determine what’s best for your situation.
Even if it feels like you shouldn’t file together because you’re getting divorced, consider the short- and long-term implications. Some people find it’s best to bite the bullet and file taxes as a married couple, even if you know the divorce is pending. The IRS doesn’t care who left whom or what your divorce case looks like. They only cares about your legal marital status and how much you and your spouse earned.
That’s why you should adopt a strategic mindset. Which tax filing options would maximize your refund and minimize your liabilities and penalties? Sometimes that means “married filing separately.” (But you’ll need to account for community property.) Sometimes they means filing jointly — and taking extra care to preserve your assets so you can protect your financial future.
And while it may be tempting to let your soon-to-be-ex handle tax filing — or simply avoid the task altogether — you need to stay in control of your assets. Enlist your divorce team and get proactive about your finances. Divorces are messy and emotionally exhausting, but the last thing you want to relinquish power to your ex.
In short, don’t get caught up in your current relationship status or how tricky it will be to file taxes with a divorce pending. Take charge and think “future stability.”
See also:
- When to File for Divorce
- How Divorce Affects My Taxes
Whatever your situation, a compassionate legal team can help you stay empowered during your divorce. At Alexandra Geczi Family Law, we regularly collaborate with tax professionals to help our clients make the best decision for their future. Reach out to schedule a discovery call and learn more about our process.