The timing of your divorce could cut your taxes. Your tax bill could be significantly less or more, depending on your filing status as of December 31.
Many people think filing status for filing their income tax return is prorated for the year; it is not. Your tax “filing status,” single or married, is determined on the last day of the year. In other words:
- If you are divorced on the last day of the year, your status is single
- If you are married at the end of the year, your status is married
Why is this important? Filing status determines your tax rate and how much you can take as a standard deduction. Tax rate and standard deduction vary greatly for each filing status and can greatly impact the amount of tax you owe to the IRS.
Washington has a 90-day waiting period after the divorce petition has been filed before a couple can be divorced. It may be too late to do anything about it if you did not file a petition before October 1. However, if you did file the petition before October 1, you should check now with a tax advisor to determine if it is better for you to be married or divorced on December 31. I suggest you do this right away so you can schedule your final divorce hearing in time to get the benefits, if it is better for you to be divorced on December 31. Or you might want to delay your divorce until after January 1, if it is better to be married at the end of the year.
For information regarding filing status and other helpful tax information for divorcing couples take a look at the IRS Publication 504 “Divorce or Separated Individuals.”