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Separate or joint tax returns during divorce

Massachusetts couples who are considering divorce might wonder whether they should file taxes jointly or separately. There are pros and cons for each choice. They need to know, however, that their filing status is determined at the end of the taxable year, so even if they have filed for divorce, they are still considered married if the decree hasn't been entered by Dec. 31.

Filing taxes separately is part of the overall separation of finances, so couples who are certain they want to divorce but whose divorce is not yet final may want to take this route. However, there are some financial advantages to filing jointly. Filing jointly may allow more deductions. It increases the alternate minimum tax exemption and leaves Social Security benefits less vulnerable to taxation. Overall tax rates may be higher for couples filing separately instead of jointly, and a number of credits are unavailable to separate filers as well.

However, in addition to the necessity of separating finances, couples may want to file separately if there is a significant difference in their income because this could allow the lower-earning partner to take a deduction like medical expenses when filing jointly would not allow this. Furthermore, people may want to file separately if they suspect their spouse has concealed income or otherwise committed tax fraud.

It might be more likely that couples who are going through an amicable divorce are able to agree on how to best file their returns. While using the status of married filing separate returns will not have any bearing on property division determinations, it may provide the couple's respective family law attorneys more clarity when it comes to negotiating a settlement agreement.

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