Filing for Divorce Early in the Year? Here’s Why It Makes Sense for Your Taxes

January 3, 2023

Divorce is never easy, and it can really drain you emotionally and financially. But did you know the timing of your divorce can impact your taxes? If you’re thinking about divorce, filing early in the year could save you some Tax Day headaches.

The Basics of Divorce and Taxes

 

  • Taxes are all about your filing status. It decides what forms you use and the tax rate you pay.
  • Married couples usually file together and are responsible for their combined income.
  • When you file as single people, you’re only responsible for your own income.
  • Filing separately after being married most of the year can mean owing more taxes than if you’d filed together. So, filing together until your divorce is final is usually better – timing is key!

Think About Those IRS Withholdings

 

  • When you’re married, you split tax withholdings from your paychecks to cover both your incomes. This helps you avoid a big tax bill (or a tiny refund).
  • If you start the year withholding as single, you need to make sure it’s enough to cover your taxes as a single person.
  • But if you withheld all year planning to file jointly and divorce late in the year, ouch! You might owe a bunch of unexpected taxes.

Extra Bonus: Drop Ex from Health Insurance

 

  • Divorcing early in the year might let you drop your ex from your health insurance. That could mean more take-home pay for you.

Maximize Those Deductions

  • When you file jointly before your divorce is final, you can still get maximum tax deductions (as long as you don’t finalize before Dec. 31st).
  • If one of you earns way more (or has fewer dependents), filing jointly might lower your total taxable income thanks to tax breaks based on family size.

Every Divorce is Different

When to actually file depends on your specific money situation. Understanding how timing affects your taxes helps you make the smartest financial decisions and sets you up for success in the coming years.

Ready to Take Control?

If you’re thinking about divorce and taxes, Call me or reach out through my website to see if I am the right lawyer to help you through a divorce this year

Disclaimer: The information contained herein is not intended to create an attorney-client relationship or provide legal or  advice. Readers should consult with an attorney or a tax advisor for personalized guidance for your specific situation.