California Divorce and Your Tax Filing Status

Finalizing your divorce either right before the end of the year or just after the new year can have serious tax consequences for you and your soon-to-be ex-spouse. That’s because the defining factor for whether you can file as a married person or as a single person for a particular tax year is your marital status on December 31 of that year.

So you and your spouse have negotiated for months and reached agreement on all the disputed issues in your case. Or have you? All the papers are signed. All your financial declarations are served and filed as necessary. Everything is done… except you still have to submit that Judgment to the Court.

Before you rush out to drop off your Judgment at the courthouse, you should take some time to consider whether or not you want your marital status for this year for purposes of income taxes to be “married” or “single.” For some people, this can have tremendous tax consequences. In some cases both spouses gain from becoming single, in other cases they gain by remaining married for one more tax year. And sometimes one gains while the other loses.

You and your attorney should have a conversation about whether or not to submit that Judgment to the Court immediately. Although you may gain from filing single for this year, some judges have been known to penalize a party who gains financially from this maneuver at the expense of the other party by equalizing the net returns (and sometimes by imposing attorney fees as sanctions).

One more consideration is the local rule in your county for submission of Judgments at the end of the year. Many counties set a deadline by which time all Judgments must be submitted if they are to be finalized that calendar year. Other counties are satisfied so long as the Judgment is submitted by December 31. So even if you and your spouse have decided to submit the Judgment immediately to terminate your marital status this year, if you live in a county with a deadline for submission, you had better know and comply with the deadline.

In a future posting, I will address a process for submitting a Judgment “nunc pro tunc”, which is an exception to the above rule. In some cases a party can submit a Judgment and ask that the Court essentially back-date the Judgment to some point in the recent past. However, this is a tricky request with a number of legal requirements that must be met. In other words, don’t delay submitting your Judgment and count on the Court granting the “nunc pro tunc” request to back-date your Judgment to 2009.

For more information about California family law and divorce issues, please contact attorney Gary D. Sparks at (925) 465-2500 or (707) 398-6008. Or, send a contact request directly from the californiadivorcelawyerblog.compage you are currently viewing.