Are You Thinking About Filing for Divorce? If So, TIme is Running Out Before the End of Year & There are Tax Consequences

By Richard Mann, Richard A. Mann, P.C., Indianapolis

Under Indiana law there is what is commonly known as a mandatory waiting period after the filing before a divorce can be final. (The legal term is dissolution of marriage but for this article the term divorce is used). Pursuant to I.C. 31-15-2-10, “in an action for a dissolution of marriage … a final hearing shall be conducted not earlier than sixty (60) days after the filing of the petition.”

The last court day of this year is December 29, 2016. During the holidays, courts are addressing emergencies and other matters, so a non-contested divorce may be pushed aside until after the beginning of the year. Therefore, your last reasonable date to file for divorce and this means file with the court is October 21, 2016. Many people think the 60 days starts when you see a lawyer to start your divorce, it does not. October 21, 2016. This assumes you will have an agreed divorce. Otherwise, depending upon the issues and the court involved, it may be too late to file the divorce and have it finalized before the end of the year.

While Indiana law allows bifurcation of the divorce versus the other issues, see IC 31-15-2-14, most courts will not grant a bifurcated divorce without agreement of the parties, and many courts will not grant a bifurcated divorce at all, especially if children are involved. Further, your spouse may not agree as a matter of strategy especially if you are the higher income earner.

Now you might ask, what does it matter?

The IRS website states,

The IRS offers these seven facts to help you choose the best filing status for you.

  1. Marital Status. Your marital status on the last day of the year is your marital status for the entire year.
  2. If You Have a Choice.  If more than one filing status fits you, choose the one that allows you to pay the lowest taxes.
  3. Single Filing Status. Single filing status generally applies if you are not married, divorced, or legally separated according to state law.
  4. Married Filing Jointly. A married couple may file a return together using the Married Filing Jointly status. If your spouse died during 2012[6], you usually may still file a joint return for that year. Dates have not been updated on the IRS website.
  5. Married Filing Separately.  If a married couple decides to file their returns separately, each person’s filing status would generally be Married Filing Separately.
  6. Head of Household.  The Head of Household status generally applies if you are not married and have paid more than half the cost of maintaining a home for yourself and a qualifying person.
  7. Qualifying Widow(er) with Dependent Child.  This status may apply if your spouse died during 2010[4] or 2011[5], you have a dependent child and you meet certain other conditions.”
    Dates have not been updated on the IRS website.

Look at paragraphs one (1) and three (3). Paragraph three (3) is not as simple as it looks as the IRS may require state law to meet certain standards for the term “separated” and it does not mean you just do not live together. You should consult a Certified Public Accountant (CPA) to verify your situation.  

If your divorce is final by December 31 (this year December 29), will you be in a higher or lower tax bracket? If you are not divorced by December 31 (this year December 29), how will the refund or tax liability be handled? Who gets the exemptions for any children and will you qualify for head of household as described in paragraph 6? These decisions could mean thousands of dollars difference in your tax liability and should be given consideration. The IRS has not published the schedules for 2016; however, to obtain an idea of the affect upon you check out the interactive tool offered by the IRS for 2015.

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Richard A. Mann has been practicing Family Law for more than 36 years in the Indianapolis area and throughout the State of Indiana. He is a Certified Family Law Specialist as certified by the Family Law Certification Committee, a Registered Family Law and Civil Law Mediator and Guardian ad Litem and Parenting Coordinator. Mr. Mann and his firm, Richard A. Mann, P.C. Attorneys at Law, are proud to have been one of the firms who represented Same-Sex couples who were successful in overturning Indiana’s ban on Same-Sex marriage. He continues to fight discrimination in the law.

While a large portion of Mr. Mann’s practice is in the Family Law area he also represents several corporations on contract, personnel and other matters. He also has a varied General Practice in wills, estates, juvenile matters, collections, probate throughout the state of Indiana. Mr. Mann has tried murder cases as well as a death penalty case.

Mr. Mann has been selected for inclusion in Super Lawyers SuperLawyers Edition for 2009, 2010, 2011, 2012, 2013, 2014, 2015 & 2016.

Follow Richard Mann on FacebookTwitter, or read more blogs by him here.

This blog does not constitute legal advice nor does it establish an attorney client relationship. This is for general information purposes as in most legal situations the facts and terms of an agreement between the parties can affect the result.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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