Dont Forget To Separate Your Taxes After A Divorce
Many residents of New Jersey may be familiar with the old adage that discourages physical intimacy after a divorce, but a recent article seeks to emphasize that a similar principle ought to be applied to filing joint tax returns after separation. According to the author, such actions are inherently dangerous because divorced couples often separate because of their inability to cooperate or communicate with one another, and as a result, it is often problematic to entrust one another with important financial assets. To illustrate his point, he offers the anecdote of a recently divorced couple that ran into serious problems when they tried to file a joint return on their accounts.
The couple in question had their divorce after 18 years of marriage, but nevertheless chose to maintain jointly owned checking accounts with Washington Mutual and Harborstone Federal Credit Union. They operated the accounts separately and did not monitor one another’s statements. When they filed their taxes in 2009, the man gave his former wife his tax information so that she could file a joint return as they had always done. Instead, he found that she reduced his reported wage, collected his refund and arranged to have more than $37,000 transferred to her Washington Mutual account from his individual retirement account.
This case illustrates some of the problems inherent to complex property division during a divorce. Although many people are familiar with the need to sometimes divide real estate assets such as homes and other properties, financial assets such as those the article describes must also often be equitably divided. Although some couples may choose to avoid or delay this due to the complications involved, doing so can lead to larger problems down the road, as the man in this case witnessed.
Many couples are understandably intimidated by the complexities of the tax issues surrounding their divorce and may be tempted to continue filing joint returns after their separation. In addition to his or her other services, an attorney may be able to assist former spouses in arranging their finances in such a way that they can feel free to file independently as they once did.
Source: Forbes, “Post Divorce Tax Intimacy Can Be Riskier Than Post Divorce Sex“, Peter J. Reilly, January 07, 2014