Tax time arrives every year, like it or not, whether you are in the midst of a divorce, or not. Although everybody has an option to file separately every year, the election to do so in the year spouses stop living together is of particular concern. Be sure to discuss with your attorney and with your tax accountant the ramifications of how income is properly reported to the taxing authorities during the year of separation.
The reporting requirements are controlled by the fact that California is a community property state. As such, all income earned by either party while the parties are married and living together [i.e. before the date of separation] is community in character. Each party has the obligation to report one half of the community income plus all of his/her separate income [earnings after date of separation] on his/her respective separately filed tax return [married filing separate or head of household]. If the parties file a joint tax return then all of the community income plus all of both parties’ separate earnings are reported on the one joint return [married filing joint].
The Internal Revenue Code allows a married individual who files a separate return to later amend his/her return and file a joint return for that year but does not allow a married person who filed a joint return to later amend the jointly filed return to a separate return.
These distinctions and many more related to tax deductions and exemptions come into play during the year a married couple separates and each year until the marriage is dissolved. It helps to have a family law attorney who is familiar with these issues so you are properly counseled to proceed appropriately and in accordance with achieving your goals. The attorneys at Burke & Domercq, APC, APC in Carlsbad, San Diego County stand ready to assist you.”