Tax Return Planning During a Georgia Divorce or Separation: Tips From an Atlanta Divorce Lawyer

As the tax filing date for each year steadily approaches and you begin organizing and/or gathering documents to assist in your upcoming tax preparation for the prior fiscal year, you may want to consider whether you and your spouse are going to file married jointly or married filing separately.

Disadvantages of Separate Returns:  Married couples who file jointly are taxed as if each spouse had exactly the same taxable income.  Accordingly, substantial tax savings are realized by filing jointly.

Different tax rates on separate returns; earnings taxed separately: If you are separated from your spouse but still legally married by the end of 2006, you must file separately unless you and your spouse agree to file a joint return or a court has entered a judgment of legal separation.  A later obtained judgment or marital dissolution does not relate back to an earlier year in which you and your spouse were married.

You and your spouse will each be taxed on your respective earnings separately.  But you will each have to allocate income, treating income earned before the date of separation as community property (taxable half to each) and income earned after the separation date as the earning spouse’s separate property.  If all income is community income so that the income and deductions are divided equally among you and your spouse, the total tax on separate and joint returns will be the same.

Restrictions on itemized deductions and child care credit: If you and your spouse file separate returns, you both must agree to itemize deductions.  If not, then neither can.  IRC Section 63(e)(1).  No child credit may be claimed on a spouse’s separate return unless the other spouse was absent from the household during the last six months of the year.  IRC Section 21(e)(4)

Allocation of tax liability: Separated spouses who are willing to file jointly should reach a clear agreement as to how the tax liability will be apportioned between them.  A logical approach is to prorate the tax liability by using a ratio based on the parties’ separate incomes.  In the alternative, spouses may chose to allocate liability based on what each would have paid if separate returns were filed.

Relief from tax liability: Generally, spouses who sign a joint return are each jointly and severally liable for the tax shown on that return, including any tax deficiencies, interest and penalties attributable to the other spouse.  The liability exposure should be kept in mind when deciding whether to file jointly or separately.

Potential joint liability relief: A spouse wrongfully exposed to joint liability for deficiencies, interest and penalties may have recourse under an indemnification agreement or under various code provisions.  For example: (1) ‘Innocent Spouse’ relief from liability for tax deficiencies attributable to erroneous items of the other spouse (IRC Section 6015(b)); (2) ‘Separate liability’ relief from liability for tax deficiencies (IRC Section 6015(c)); and Equitable relief from liability for tax deficiencies and underpayments (IRC Section 6015(f)).

Helpful assistance can also be found at the IRS Web site http:/www.irs.gov.

SOURCE: Adapted from a post by California Family Law Practice Blog

Have more questions about divorce and taxes? Please call our experienced Atlanta GA divorce attorneys for an in-depth strategy and planning session at 770-425-6060 or fill out an online contact form.

STEPPING BACK FROM ANGER: Protecting Your Children During Divorce

Every year, more than 1 million American couples get divorced. For those men and women, it is often the most grueling, emotionally exhausting, and expensive experience they will ever have.

For their children, it can be even worse.

Imagine you are six, and suddenly the only people you have ever relied on for food, shelter, and love are at each other’s throats. In your young mind, you conclude that you are the cause of their anger, and that you might get lost in the shuffle. Before you know it, you think to yourself, there won’t be anybody left to scare off the closet monsters.

To make matters worse, you often find yourself alone in your anguish, as the two people you usually go to for solace – your parents – are too wrapped up in their own anger and grief to be of much help.

It is unsettling, to say the least.

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Healing the Pain of Divorce

Thanks to Denver attorney and new fellow blogger Peter Mullison at My Colorado Divorce Lawyer Blog for this post:

Cathy Miller at about.com offers some good advice for people dealing with the emotional toll of divorce:

  1. Develop a support system. Find those friends and family who will be there to see you through the times when you need a shoulder to cry on or someone to listen. A clergyman or professional counselor may be helpful, as you can talk openly and confidentially. After a divorce, your true friends won’t be hard to recognize, because they will be willing to help you adjust to the changes. Seek a divorce recovery group in your community, so that you can interact with others going through the same emotions.
  2. Seek professional help if needed. Some people get stuck in the pain of divorce, and may experience depression, whether mild or severe. In that case, it is imperative to seek professional help, through your family doctor or a licensed therapist. Don’t try to carry your burden alone.
  3. Lean on your faith. People who have a religious base may find this is the time they rely deeply on their faith. Even those who don’t consider themselves religious can lean on the faith in themselves that healing is taking place, and that they have the strength to pass through it.
  4. Let yourself feel your emotions. Now is not the time to try to hold in your feelings. Cry when you need to. Express your fears. Voice your anger. Holding in your emotions or trying to convince yourself you are fine when you aren’t is not healthy for you emotionally or physically.
  5. Journal. Many people find that journaling gives them a safe place to process their thoughts and feelings. Choose a journal and set a time of the day when you can write uninterrupted. This may be a time of discovery for you, of the deep seated feelings you didn’t even realize you had. The key to successful journaling is just to keep doing it. Find a safe place to keep your journal so you can have access to it but feel it is safe from others. After some time has passed, you can look back at how far you’ve come and all that you have accomplished.
  6. Don’t isolate. Accept the offers to go to lunch with your friends. Take a day and go out window shopping or sightseeing in your community, and ask someone along. Spend time with family and friends and don’t allow yourself to become isolated. Some time alone is good for everyone, but don’t overdo it.
  7. Be patient with yourself. For a while it may seem you take two steps forward and one back. Allow yourself the time it takes to heal the emotional wounds. Deal with them now so they don’t show up in your life in other ways later. Don’t expect the pain to go away too quickly, but allow yourself all the time you need. This is a very individual process, so don’t compare your progress with others.

SOURCE: My Colorado Divorce Lawyer Blog