Frequently Asked Questions: Divorce Marital Status For Income Tax in Colorado

For federal income tax purposes, marital status is determined as of the close of the taxable year. 26 USCS § 7703. An individual who is legally separated from their spouse under a decree of divorce or legal separation is not considered married. 26 USCS § 7703. The critical date is December 31 of each year. If a client's divorce decree is finalized on December 31, they are considered unmarried for the entire tax year. If finalized on January 1 of the following year, they are considered married for the prior year with the option of filing taxes jointly for the prior tax year.

• Married Filing Jointly: Available to married individuals who file a single joint return. 26 USCS § 6013.
• Married Filing Separately: Available to married individuals who choose to file separate returns. 26 USCS § 63.
• Single: Available to unmarried individuals who do not qualify as surviving spouse or head of household. 26 USCS § 1.
• Head of Household: Available to unmarried individuals who maintain a household for a qualifying person. 26 USCS § 2.

An individual who is legally separated from their spouse under a decree of legal separation is not considered married for tax purposes. 26 USCS § 7703. Such individuals must file as either Single or Head of Household (if they qualify). 26 USCS § 2. Informal separation or a separation agreement between spouses does not change marital status for federal tax purposes unless it meets the "abandoned spouse" rule requirements under 26 U.S.C. § 7703(b). Keep in mind, that Married Filing Separately results in the lowest standard deduction. It may often not be the most tax advantageous choice.

Writer’s Practice Experience Observation: Divorcing parties should consult with a tax preparer or accountant with regards to income tax status and filing as income tax law is a specialized area. Most domestic relations practitioners only provide basic tax information and are not able to advise in depth on tax matters.

Attorney fees and court costs incurred for divorce are not deductible, even if incurred to obtain a financial settlement or preserve property. C.R.S. 39-22-104.

A qualifying child for purposes of the child tax credit must meet relationship, age, residency, support, and joint return tests. 26 USCS § 152. The child tax credit is available regardless of the parent's marital status, provided the parent claims the child as a dependent and meets the income limitations. Filing status affects the income phase-out thresholds but does not determine eligibility.

Writer’s Practice Observation Tip: Many parents take turns alternating available tax deductions and/or credits each year for simplicity. Some parents who have primary time with the children think that they should take the benefits each year, however the other parent is usually paying child support so is also supporting the children financially.

When spouses file a joint return, the tax liability is joint and several. 26 USCS § 6013. This means that each spouse is individually responsible for the entire tax liability, regardless of which spouse earned the income or caused the underpayment under federal law. State courts can allocate deductions and payments, however only the parties are bound by those requirements. The state courts can not bind the federal government. That means that if one party does not make payment for tax allocated to them in the decree, the federal government will still attempt to collect from both parties.