Carabell, Leslie & Co. write: A couple remains married for tax purposes until a final decree of
divorce is issued by a domestic relations court; a domestic relations
court issues a final decree constituting a legal separation under local
law, requiring the couple to live apart; or the abandoned spouse rule
applies.
An individual is required to live apart from his or her spouse for
the entire last six months of the tax year to achieve abandoned spouse
status. In some divorce situations, where the abandoned spouse rule
does not apply, a spouse may be reluctant to file a joint return due to
the joint and several tax liability resulting from joint returns.
Accordingly, in situations in which the abandoned spouse rule cannot
be met but a spouse is reluctant to file a joint return, one option is
for the spouse to file under the status of married filing separately,
then wait to determine if any instances of concern regarding joint and
several tax liability arise, and then elect to file an amended joint
return within three years of the original due date of the separately
filed returns. An amended return can be filed under joint return status
where separate returns had originally been filed. However, the amended
return must be filed within three years of the original due date,
excluding extensions, of the separate returns.
An individual who has not received either a decree of divorce or
separate maintenance from a court as of the last day of a tax year and
who fails to qualify as an abandoned spouse is considered married for
tax purposes. The taxpayer must therefore file a joint return or files
as married filing separate.
The potential tax savings from delaying the divorce to file a joint
return may not justify the additional liability exposure created by the
joint filing. In some instances, completing the divorce and terminating
the marriage may in fact save income taxes.
Once a marriage is terminated for tax purposes, the former spouses
are no longer eligible to file a joint income tax return. The
individuals are then faced with the problem of dividing income and
deductions on the divorce-year return. Also, special issues arise for
allocating mortgage interest and taxes in divorce situations. Finally,
the rules governing the reporting of income and deductions differ
significantly between community property and equitable distribution
states.
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