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Joined: Dec 1999
Posts: 133
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Member
Joined: Dec 1999
Posts: 133 |
Here is a question for all of you who are either recently divorced or in the process.<P>How did you handle the filing of your income taxes for the year you got divorced or how do you plan on filing this year if you are in the process now?<P>Here is a little background on my situation:<P>We have 3 kids (dependents) and are sharing custody at this time. The split is pretty close to 50/50 on where their time is spent.<P>Neither party is paying support to the other. <P>We are splitting the cost of daycare.<P>W is working and has her own income – started job 4/1/00<P>I was off work for 10 weeks this summer (it’s a long story)<P>W is living in her own apartment (since august)<P>W withdrew her entire 401k money from a previous employer (money is gone now)<P>We have split everything financially but have done nothing legal or official. She pays her bills, I pay my bills and the house bills, since my intention is to keep the house and pay her 50% of the equity when and if we do divorce.<P>Questions: <P>What status to file - married or married filing separately?<P>I think married filing separately is the best option to allow us to keep our finances as separate as possible, and keep issues like 401k penalties and mortgage interest deductions straight.<P>Who claims dependents? I am looking to be fair here. They spend equal time with both of us and neither one of us is paying support to the other. The problem is you can’t divide 3 by 2 and get an even number, so the best we can get is a 2-1 split with one of us getting an advantage here.<P>I intend to take the deduction for the mortgage interest on the house based on the fact that I am paying that loan and living in the house.<P>I think she should pay the taxes and penalties on her 401k withdrawal.<P>Overall I’m looking to be as fair as possible, while not getting myself hurt by her 401k withdrawal.<P>Any advice on how others have handled taxes for that “transition” year would be appreciated.<P>Thanks.<BR>
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Joined: Aug 2000
Posts: 1,148
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Member
Joined: Aug 2000
Posts: 1,148 |
I'm in a pretty similar situation. We're going to file married and joint this year to get the tax benefits. Probably next year as well, then we're each on our own. We'll alternate taking my son as a deduction every other year (in the Sep. A.)<P>I agree with her paying the interest & penalties on her 401k withdrawl.<P>------------------<BR>nick<P>it's only time that heals the pain <BR>and makes the sun come out again
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Joined: Aug 2000
Posts: 818
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Joined: Aug 2000
Posts: 818 |
help me,<P>The best thing for you to do, if possible, is to have your spouse accompany you to an accountant. Ask the accountant to run your taxes both ways - MFJ and MFS. Unfortunately there are usually less reasons to file MFS being that there are usually limitations on deductions and the like.<P>I was a CPA for several years and I know the tax package (software) we used to create the forms would compute the final tax numbers both ways with a press of a button. In most cases it benefitted both spouses to file jointly and then split what was owed or what was refunded. That is just how the tax code works.<P>But if your spouse does not want to cooperate, the point is moot... You can't have one spouse file MFJ and one spouse file MFS.<P>Mike
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Joined: Jun 1999
Posts: 2,580
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Joined: Jun 1999
Posts: 2,580 |
My x left in June 99 and we were divorced on 2-1-00. The divorce papers let her claim our son.<P>She asked me to complete taxes for 99 and gave me all her forms. I took them to an accountant and he found that filing married filed seperately was the most beneficial to us both. There were no 401K problems.<P>I did sell stock in preparing to pay her out and what we found was if I let her claim one of the kids, I was going to owe about a grand and she would get about a grand for a return. <BR>With me claiming both kids, I was only paying a small amount and she was getting a small return. SO I told the accountant to go ahead and geive me both deductions. I knew she would never look that close. She never said a word.<P>This year again I will probaby take a hit for selling stock, again to pay her off. I am thinking of asking her to allow me to claim both kids since there are with me over 70% of the time. I hope she also asks me to do her taxes again so I can find out how much she makes!
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