Should I File a Joint Tax Return or Not During a Passaic County Divorce?
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divorce, an estranged spouse may be very hesitant to file a joint tax return. When the other spouse is insistent about filing jointly, an issue arises about whether there is a legal obligation to file joint taxes during a separation. The specific factual background of the case would dictate the response to this inquiry. However, significant factors to consider when deciding whether to file a joint return include: the presence of substantial financial benefits in filing jointly, preparation of returns by an independent expert, evidence (or lack thereof) of past fraudulent returns, the lack of a reason for refusal to file jointly, and most importantly, a written agreement that the party seeking to file jointly will hold harmless and indemnify the other spouse.
New Jersey Case Law on Separated Spouses Filing Jointly
In Bursztyn v. Burzstyn, 379 N.J. Super. 385 (App. Div. 2005), the parties who lived a very extravagant lifestyle, did not pay all of their taxes. At the time of their divorce trial, the parties owed substantial back taxes for two years of 1999 to 2000. Their spending had far exceeded their means and as a way of financing spending in excess of their income, they did not pay their full tax obligations. As of their trial, they had not filed all required tax returns and owed a substantial amount of money to the government. A tax expert testified that they would save a significant amount of money if they filed outstanding joint tax returns. Yet the estranged wife had refused to file any further joint tax returns with her husband.
The Appellate Division held that the wife must file joint tax returns with her spouse, and ordered that the husband execute a hold harmless and indemnification agreement for any allegations of fraud relating to the returns. This holding is important, as it represents the first New Jersey Case providing a court with the authority to compel parties to file joint tax returns. Significantly, the Bursztyn court acknowledged the consequential financial exposure of a spouse resulting from filing a joint tax return(s) and thus, required indemnification by the husband to the wife for any fraud related to the filed return. It is noteworthy, however, that this security is not bulletproof, as the IRS does not waive exposure for joint and several liability.
Given this case law, it is more difficult for a spouse to avoid filing a joint tax return during a separation. Without compelling reasons to refrain from filing jointly, a court may compel a separated couple to file joint tax returns when significant financial benefit will result.
Filing Joint Tax Returns Following a Divorce In Essex County
If a divorce is finalized when taxes have not been filed for a period during which the couple was separated, there may be an issue about filing taxes jointly for that period. Considerations would include: how to handle deductions concerning children, characterization as head of household, and claiming real estate taxes and mortgage interest (especially if one spouse did not reside in the marital home or contribute to upkeep thereof during the separation). Absent an agreement concerning these issues, the parties should speak with a financial expert to determine the preferable course of action.
Contact our Wayne NJ Divorce Attorneys to Discuss Your Case
Consulting with an experienced New Jersey divorce attorney will help you to understand the implications of filing a tax return jointly at any stage of your divorce. Contact the Passaic County divorce attorneys at The Montanari Law Group, with offices in Woodland Park, New Jersey, at 973.233.4396 for a cost-free consultation. Our lawyers have extensive experience representing clients in Passaic and Essex counties who are involved in divorces and we will be happy to answer all of your questions.