If your divorce wasn’t finalized until Jan. 1, 2021, or you’re still in the divorce process right now, you and your spouse are still considered married for purposes of your 2020 income taxes. That means that even if the two of you have gone your separate ways, you both have to file your taxes as married people.
The question is, do you choose a status of married, filing jointly (MFJ) or married, filing separately (MFS)? You’ll both need to list the same status. If you choose MFJ, you’ll need to work together to some extent to file a joint return this one last time.
Benefits of filing jointly
As you’ve probably learned over the years, there are a number of financial benefits to filing your taxes jointly. For example, you may be able to qualify for a lower tax rate, more tax credits and deductions and more tax-deferred retirement account contributions.
If you lived together and your finances were intertwined for most or all of the year, it can be simpler to file a joint return. That’s assuming that you get along well enough to cooperate on the return or at least to deal with the tax professional who’s doing your return.
Benefits of filing separately
If you’re concerned about sharing liability with your spouse for any underpaid tax amounts, penalties and interest owed, you may be better off filing separately.
If you and your spouse lived separately for more than half of 2020, you may be able to choose the head of household status, which has more benefits than MFS. However, to file under this status, the following must be the case:
- Your spouse wasn’t in the home for the latter half of last year.
- You paid over half of your household expenses for the year.
- Your child(ren) lived in this home with you for more than half the year.
These are just a few things to consider. It’s best to talk over your situation with a tax professional who doesn’t have any history with or allegiance to your spouse as well as with your family law attorney. Your attorney can likely also recommend a tax professional for you if you don’t already have your own. Some tax professionals specialize in helping divorcing and divorced people with their unique tax issues.