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Filing Taxes During a Divorce in Arizona

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Divorce can be a challenging process, affecting various aspects of your life, including how you file your taxes. Understanding how your filing status changes and what it means for your taxes can help you make informed decisions during this transition period. Arizona law, under the guidelines of the Arizona Revised Statutes, dictates certain legal obligations and rights concerning divorce, which indirectly affect tax filing status and procedures.

Colburn Hintze Maletta can assist you in understanding your rights and obligations regarding tax filing status, claims for dependents, and potential tax liabilities and benefits resulting from your divorce

Contact us today at 602-825-2500. to discuss your tax filing questions or concerns related to family law matters.


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Filing Taxes During a Divorce

How Does Divorce Affect Your Filing Status 

The impact of divorce on your tax filing status is substantial and varies significantly before and after the divorce is finalized.

Before the Divorce is Finalized

Prior to the finalization of a divorce, couples are still legally married in the eyes of the law. This status allows them to choose between filing a joint tax return or filing separately as “Married Filing Separately.” Filing jointly can provide several tax benefits, including access to higher income thresholds for tax brackets and eligibility for various credits and deductions.


However, it also means both parties are jointly responsible for any tax liabilities and compliance with the tax return.

Filing as “Married Filing Separately” may result in higher tax rates and limited access to certain tax credits, but it separates each spouse’s tax liabilities, which could be beneficial if one spouse suspects the other of tax misreporting or if they prefer not to be financially intertwined.

After the Divorce is Finalized

Once a divorce is finalized, each individual is considered unmarried for the entire tax year if the divorce is completed by December 31. The individuals must then file as “Single” or, if they qualify, “Head of Household.” Filing as “Head of Household” offers several benefits over the “Single” status, such as lower tax rates and a higher standard deduction. To qualify for “Head of Household” status, you must have paid more than half of the household expenses for the year and have a qualifying dependent live with you for more than half the year.

couple filing joint tax return

Filing a Joint Income Tax Return 

During a divorce, deciding whether to file a joint income tax return requires careful consideration of various factors. This choice can significantly impact both parties financially and legally, especially under the specific context of Arizona law and federal tax regulations.

  • Benefits of Joint Filing: Filing jointly can result in numerous benefits, such as eligibility for various tax credits and lower tax rates compared to filing separately. For many divorcing couples, this option can provide a financial advantage, reducing the total tax burden faced by each individual.
  • Risks and Responsibilities: When filing jointly, both parties are jointly and severally liable for the information reported and the taxes due, including any potential penalties and interest. This shared responsibility means that if one party omits income or incorrectly reports deductions, both are liable for any resulting tax liabilities. This is a critical aspect to consider, especially if trust issues exist or if the divorce proceedings are contentious.
  • Considerations and Consent: Both parties must agree to file a joint return. This agreement involves trust and transparency about financial matters, which can be challenging amidst the emotional and financial complexities of a divorce. If one spouse suspects the other of tax evasion or misreporting income, it’s advisable to file separately to avoid potential legal complications.
  • Legal Separation and Joint Filing: In Arizona, if you are legally separated, you are not considered married for tax purposes and therefore cannot file a joint tax return. It’s important to understand the distinction between legal separation and an ongoing divorce process when making tax decisions.
  • Protective Measures: If you opt to file jointly, consider signing an indemnity agreement with your spouse. This agreement can outline responsibilities for any taxes, penalties, and interest due on the joint return and can provide some financial protection if disputes arise later.

Before deciding to file jointly, it’s essential to weigh the pros and cons carefully. Consider seeking advice from a tax professional or a family law attorney to understand fully how this decision impacts your specific situation. 

In Arizona, legal separation and divorce affect tax filing differently. Legally separated individuals are considered unmarried for tax purposes and must file as “Single” or “Head of Household,” if eligible. However, until a divorce is finalized, spouses are still considered married and can choose to file jointly or separately.

When Should You Not File Jointly 

Deciding not to file a joint income tax return during a divorce in Arizona is a decision that should not be taken lightly, as it can significantly impact your financial and legal situations. There are specific circumstances where filing separately is more beneficial:

  1. Mistrust and Financial Discrepancies: If there’s a lack of trust between you and your estranged spouse, especially regarding financial honesty and transparency, it’s safer to file separately. This decision is crucial if you suspect your spouse of underreporting income, overstating deductions, or other forms of tax evasion.
  2. Separate Debts and Liabilities: If one spouse has significant outstanding debts or potential legal financial liabilities, filing separately may protect the other spouse from being responsible for these obligations.
  3. Disparate Financial Situations: When one spouse has significantly higher income or eligible deductions, filing separately might lead to overall lower household tax liabilities. This scenario often requires calculations to compare the tax responsibilities under both filing statuses.
  4. Pending Divorce Proceedings: If the divorce proceedings are contentious, or if there is a considerable disconnect in negotiation about financial matters, it may be more straightforward and less contentious to file separately.
  5. Benefit Maximization: Sometimes, individual tax situations, such as eligibility for certain credits or deductions, may result in a better financial outcome if filed separately. Situations that warrant this include when one spouse qualifies for significant medical expense deductions, educational tax credits, or other itemized deductions that would not be fully beneficial on a joint return.

claiming dependents on tax return

Claims for Dependents

The right to claim children as dependents usually goes to the custodial parent, defined by the IRS as the parent with whom the child spent the most nights during the tax year. However, this right can be negotiated and assigned as part of the divorce agreement.

If the non-custodial parent is granted the right to claim the child or children as dependents, the custodial parent must complete IRS Form 8332 to release the exemption. This form should then be attached to the non-custodial parent’s tax return.

It’s important to note that while the right to claim a dependent can significantly affect tax outcomes, such as qualifying for the Child Tax Credit, it does not affect the obligation for child support or other financial responsibilities decided during the divorce proceedings.

Additionally, the rules surrounding who can claim the child and dependent care credit and earned income credit remain stringent. Typically, only the custodial parent can claim these credits, regardless of who claims the exemption for the child. Therefore, these factors should be considered when negotiating divorce terms.

Both parents cannot claim the same child as a dependent in the same tax year; doing so can lead to IRS audits and additional penalties.

It’s advised to clearly establish the terms regarding dependent claims in the divorce decree to avoid future conflicts and ensure both parties understand their tax obligations.

What Happens if a Spouse Fails to Pay Tax Liabilities

When a spouse fails to pay tax liabilities, it can create significant legal and financial challenges, especially if you have filed a joint tax return. In the case of a joint return, the IRS holds both spouses jointly and severally liable for any taxes owed. This means that each spouse is individually responsible for the entire tax debt, even if all the income reported was earned by only one spouse.

If tax liabilities are not paid, the IRS can take several actions to collect the owed amount, including garnishing wages, seizing bank accounts, or placing a lien on property. These actions can impact both spouses, regardless of who earned the income or incurred the tax debt.

However, there are protections and relief options available for individuals who find themselves in this situation due to the actions or inactions of their spouse:

  1. Innocent Spouse Relief: If you can prove that you were unaware of the understatement of tax, you may qualify for innocent spouse relief. This relief could release you from the obligation to pay taxes, interest, and penalties related to the joint tax return.
  2. Separation of Liability: This applies to those who are divorced, legally separated, or no longer living together. You may be relieved of the responsibility for tax, interest, and penalties related to the joint return that were not properly reported.
  3. Equitable Relief: If you do not qualify for innocent spouse relief or separation of liability, you may still qualify for equitable relief. This form of relief is applied in situations where it is unfair to hold you liable for the tax debt based on the facts and circumstances.

It is important to respond promptly if you receive a notice from the IRS regarding unpaid taxes. Ignoring the problem can result in increased penalties and interest, and potential legal action. Consulting with a tax professional or a family law attorney can provide you with guidance on how to proceed and may help mitigate the consequences of your spouse’s failure to pay tax liabilities.

Frequently Asked Questions: Filing Taxes During a Divorce in Arizona

Q: Can I file my taxes as “Head of Household” if I am going through a divorce in Arizona? A: You may file as “Head of Household” if your divorce has not been finalized and you meet certain criteria. These include paying more than half the cost of maintaining your home for the tax year and having a qualifying child live with you for more than half the year. Consult with a family law attorney in Arizona to determine if your situation qualifies.

Q: If my divorce is finalized towards the end of the tax year, how does this affect my tax filing status? A: If your divorce is finalized by December 31st, the IRS considers you unmarried for the entire tax year. You would need to file either as “Single” or “Head of Household,” if eligible. This change could affect your tax liabilities and available deductions.

Q: Are there any tax benefits if I choose to file jointly with my ex-spouse after our Arizona divorce has not been finalized? A: Filing a joint income tax return can offer several benefits, including access to certain tax credits and potentially lower overall tax liabilities compared to filing separately. However, both parties must agree to file jointly and be aware that they are both responsible for any tax due and any potential audits or liabilities.

Q: What happens if my spouse fails to report income correctly on our joint tax return in Arizona? A: If you file a joint tax return and your spouse incorrectly reports income, both of you are jointly responsible for any additional taxes, interest, or penalties. If you were unaware of the discrepancy, you might qualify for Innocent Spouse Relief from the IRS. Consult with an experienced divorce attorney or a tax professional to explore your options.

Q: How can filing as “Married Filing Separately” affect my taxes during a divorce in Arizona? A: Filing as “Married Filing Separately” may result in you paying higher taxes due to the loss of certain tax benefits and higher tax rates compared to filing jointly. However, it can be beneficial if you wish to be solely responsible for your tax return or if there are significant discrepancies in income or deductions between you and your spouse.

Q: How long after my divorce can my ex-spouse and I continue to file our taxes jointly in Arizona? A: You and your ex-spouse can only file your taxes jointly if your divorce has not been finalized by the end of the tax year. Once the divorce is finalized, you must file separately for that tax year and all subsequent years.

Q: What is the significance of the “end of the tax year” for filing statuses during a divorce in Arizona? A: The “end of the tax year” is significant because your marital status as of December 31st determines your filing status for the entire year. If you are still legally married on this date, you can choose to file jointly or separately. However, if your divorce is finalized by this date, you must file as “Single” or “Head of Household,” if applicable.

Contact the Family Law Attorneys at Colburn Hintze Maletta 

If you are dealing with the complexities of filing taxes during a divorce in Arizona, Colburn Hintze Maletta can assist you. Understanding how to properly file your taxes during this transitional period can be complex, and the experienced attorneys at this firm can provide guidance tailored to your situation.

 For those undergoing divorce proceedings, it is important to understand how this will impact your tax filings, whether you should file jointly or separately, and how to navigate claims for any dependents.

You can reach the law firm around the clock at 602-825-2500. to discuss your tax filing questions or concerns related to family law matters. 

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