Re: Tax implications of upcoming divorce
paulthomascpa
"Dan" <no...@hotmail.com> wrote
> Completely unexpectedly, my wife moved out of our home on 10/4/09, moved
> in with her parents in California, and filed for divorce. She is 39, I am
> 51. She works, I have not been employed for about 12 years, for health
> reasons. We own our house free and clear, a single family unattached home
> in the state of WA. We have no children, and have been married 6 years.
> It is unlikely the divorce will be finalized before 1/1/10. In the past,
> I have done our fed taxes (WA has no income tax, nor do any of our local
> govt entities) with TurboTax. I have not looked at the version of this or
> any other tax program for 2009, if they are even available yet. What
> modifications will need to be made when I file this year, in light of the
> developments of the last 2 months?
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 Thomas, CPA
www.paulthomascpa.com
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paulthomascpa
"Dan" <no...@hotmail.com> wrote
> paulthomascpa wrote:
>> "Dan" <no...@hotmail.com> wrote
>>> Completely unexpectedly, my wife moved out of our home on 10/4/09, moved
>>> in with her parents in California, and filed for divorce. She is 39, I
>>> am 51. She works, I have not been employed for about 12 years, for
>>> health reasons. We own our house free and clear, a single family
>>> unattached home in the state of WA. We have no children, and have been
>>> married 6 years. It is unlikely the divorce will be finalized before
>>> 1/1/10. In the past, I have done our fed taxes (WA has no income tax,
>>> nor do any of our local govt entities) with TurboTax. I have not looked
>>> at the version of this or any other tax program for 2009, if they are
>>> even available yet. What modifications will need to be made when I file
>>> this year, in light of the developments of the last 2 months?
>>
>> 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.
>
>
> 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're only interested in you, file jointly and you keep the refund. I
suspect she's not going to be receptive to that idea.
> If we were to file separately, would I simply have "no income"? I'm
> assuming this would ALSO lower any refund she might receive?
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.
Herb Smith
wrote:
> "Dan" <n...@hotmail.com> wrote
>
>
>
>
>
> > paulthomascpa wrote:
> >> "Dan" <n...@hotmail.com> wrote
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.
Mark Bole
>>> paulthomascpa wrote:
>>>> "Dan" <n...@hotmail.com> wrote
>>>>> Completely unexpectedly, my wife moved out of our home on 10/4/09, moved
>>>>> in with her parents in California, and filed for divorce. �She is 39, I
>>>>> am 51. �She works, I have not been employed for about 12 years, for
>>>>> health reasons. �We own our house free and clear, a single family
>>>>> unattached home in the state of WA. �We have no children, and have been
>>>>> married 6 years. It is unlikely the divorce will be finalized before
>>>>> 1/1/10. �In the past, I have done our fed taxes (WA has no income tax,
>>>>> nor do any of our local govt entities) with TurboTax.
[...]
> 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
540NR will be in the picture this year whether filing MFJ or MFS.
-Mark Bole