Tax implications of upcoming divorce

"Dan" wrote

Your choices are "married filing joint" or "married filing separately". I suspect that joint filing would result in the least amount of taxes due, but if you have very little taxable income, then it benefits her more.

The two of you should start to work that issue out, if filing joint or separate, over the next few months.

Paul - Thanks for the reply. For health reasons, I have no income, her pre-tax income is approximately $70,000. We generally get a refund. In the current circumstances, I am more concerned about what would benefit me financially. I'm assuming this would be for us to file jointly & split the refund? If we were to file separately, would I simply have "no income"? I'm assuming this would ALSO lower any refund she might receive?

Thanks

Dan

If we're only interested in you, file jointly and you keep the refund. I suspect she's not going to be receptive to that idea.

Filing separately would normally result in a lower refund, yes.

I suggest that this year, the returns be prepared separately and jointly to see what the dollar impact is going to be. Generally the same preparer can input the data separately tagged to each of you and then split the return with the punch of one button to see the implications. Then you two can decide which is best and how to handle any refund and the preparation fees.

Don'dt forget that WA is a community property state, where income is shared equally - regardless of who earns it. You may just find that there is very little difference between filing joint or separate. If you have substantial itemized medical deductions, you may find that filing separate is advantageous.

Good point about community income in WA -- and California too (if she has established a new domicile in CA). In any case, half of her income earned while a CA resident will be treated as CA source income to the spouse, and CA *does* have state income tax, so it looks like a CA Form

-Mark Bole

Thanks for the replies. I forgot about the CA state tax implications. She left on 10/4, and has been living with her parents. Does this qaliy as having established a new domicile? I guess I can also just run a variety of scenarios with Turbo Tax.

Dan