There has been a lot of coverage in the news lately of people rushing to divorce before the end of the year for tax advantages. These stories are somewhat misleading. While you should of course consult your accountant, the rule generally is that if you are divorced on or before December 31st of the year, you can file your taxes as if you were single for the whole year. This is similar to the “Daddy’s little tax deduction” situation where children born on December 31st can be claimed as a tax deduction for the whole year.
What these articles do not tell you, at least in New York is that the divorce doesn’t happen that quickly. After a divorce has been filed, assuming negotiations have worked out well and the agreement and final paperwork have been filed with the court (which itself can take some time), the Judge does not necessarily sign the judgment for several months after all the paperwork is been filed. So if you wanted to be divorced by December 31st of 2016, you would have had to have started last January or February. Filing now before December 31st only gives you a head start for being divorced at the end of 2017.
That is not to say that there cannot be some tax planning left to do in 2016. For instance, maintenance is normally tax deductible to the payor and income to the payee. For people currently going through a divorce or contemplating divorce a frank conversation with your accountant will give you some answers to questions about how your divorce agreement will affect your taxes and therefore your bottom line. You will want to know the consequences of the bargain you strike in your agreement and most matrimonial attorneys will not be qualified to give tax advice. If this is your first year in this situation and your agreement is already signed, you might want to have a discussion with your accountant about how this will affect you.
Deborah E. Kaminetzky, Esq.
Kaminetzky Law & Mediation, P.C.
901 Harvard Court, Suite A
Woodmere, New York 11598
- Posted by Deborah E. Kaminetzky
- On December 16, 2016
- 0 Comments