Considered Unmarried?

[Janitor Bob]

Married couple lived together (in Ohio) with their 2 kids for all of 2012 until October......That is when he moved out and they obtained a legal separation. The divorce was not finalized until later in 2013. Can they file as single with one getting HOH or must they file MFJ/MFS since they were legally separated but not legally divorced on 12/31/12?

[Terry D EA]

<<<<<<Married couple lived together (in Ohio) with their 2 kids for all of 2012 until October.>>>>>>

Regardless of when the divorce was finalized, and by your post, they lived together as a married couple for more than half the year and therefore their only choice is MFJ or MFS. Correct me if I missed it here but if they are divorced or separated on the last day of the year it doesn't necessarily mean they are divorced or separated and living apart for the entire year.

[Janitor Bob]

I was thinking that too, but wanted to confirm

[BulldogTom]

I don't know what a legal separation is in Ohio, but divorced on the last day of the year is single for the entire year. Just like married on the last day of the year is married all year.

Tom

Hollister, CA

[ari]

Bulldog has it right; did you say there was a legal separation agreement in writing as at 12/31/12

[Janitor Bob]

I did not see it, but wife says they were "legally separated" at end of 2012.

[jainen]

>>they obtained a legal separation. The was not finalized until later in 2013<<

This is an inconsistent and unlikely scenario. Legal separation is rare because no-fault divorce is so easy these days. Generally courts only order separate maintenance when divorce is prohibited by religious beliefs. It sounds to me like they had a normal trial separation under an interlocutory decree. Easy enough to determine one way or the other, though--what does the court order actually say?

[Guest Taxed]

Not sure what you charge to do do MFJ/MFS analysis but I will go through that calculation and show them that it may make more financial to bury the hatchet for a bit and get the most refund with MFJ for 2012. For 2013 tax year they are single or one is HOH.

If they split the refunds in any ratio based on tax witheld or income etc. just split the refunds into two accounts in that ratio.

I have had very good luck with divorcing couples once they trust me that I am only looking out for their best financial interest from a tax perspective. Why they got divorced or who was at fault is not my business. The worst scenario is when one of them goes to a tax guy recommended by their divorce attorney and they don't speak to each other to get the best tax advantage.

[1040PRO]

This came from PUB 504

Unmarried persons. You are unmarried for the whole year if either of the following applies.

• You have obtained a final decree of divorce or separate maintenance by the last day of your tax year. You must follow your state law to determine if you are divorced or legally separated.

  Exception. If you and your spouse obtain a divorce in one year for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to remarry each other and do so in the next tax year, you and your spouse must file as married individuals.

• You have obtained a decree of annulment, which holds that no valid marriage ever existed. You must file amended returns (Form 1040X, Amended U.S. Individual Income Tax Return) for all tax years affected by the annulment that are not closed by the statute of limitations. The statute of limitations generally does not end until 3 years (including extensions) after the date you file your original return or within 2 years after the date you pay the tax. On the amended return you will change your filing status to single, or if you meet certain requirements, head of household.

Married persons. You are married for the whole year if you are separated but you have not obtained a final decree of divorce or separate maintenance by the last day of your tax year. An interlocutory decree is not a final decree.

Exception. If you live apart from your spouse, under certain circumstances, you may be considered unmarried and can file as head of household. See Head of Household, later.

I would say with the facts you stated THAT they had a legal separation on the last day of the year they are SINGLE for the year. SIDE NOTE. it also has been my understanding that a married person that does not live together at any time during the last 6 months of the year (NOT 6 MONTHS OF THE YEAR) then they can file as single or head of household(if have qualifying dependant) as long as it is not just for tax purposes.

[1040PRO]

ALSO from PUB 504

Considered unmarried.

You are considered unmarried on the last day of the tax year if you meet all the following tests.

• You file a separate return. A separate return includes a return claiming married filing separately, single, or head of household filing status.

• You paid more than half the cost of keeping up your home for the tax year.

• Your spouse did not live in your home during the last 6 months of the tax year. Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. See Temporary absences, later.

• Your home was the main home of your child, stepchild, or foster child for more than half the year. (See Qualifying person, below, for rules applying to a child's birth, death, or temporary absence during the year.)

• You must be able to claim an exemption for the child. However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rule described later in Special rule for divorced or separated parents (or parents who live apart) under Exemptions for Dependents. The general rules for claiming an exemption for a dependent are shown later in Table 3.

[joanmcq]

1040PRO please see jainen's definition of legal separation. It is not the same thing as being separated before a divorce. It is a now rare alternative to divorce.

[kcjenkins]

There is one clarification needed here. If a married person that does not live together at any time during the last 6 months of the year (NOT 6 MONTHS OF THE YEAR) then they can file as single or head of household (if have qualifying dependent living with them) BUT THE OTHER SPOUSE WHO DOES NOT HAVE A DEPENDENT DOES NOT THEN GET TO FILE AS SINGLE. That other spouse still has to file as MFS. Neither of them can file as single unless the divorce was final by year end.

[Janitor Bob]

the guy moved out in October, so they do not qualify for the rules that allow one to file as HOH. My delay and confusion is caused by the words "legally separated"....WTH does this actually mean for tax purposes? I have not seen the seperation agreement, but I am not an attorney and am not qualified to make tax decicions based on "my opinion" of any seperation agreement. I am assuming (since divorce was final in 2013) that this "legal separation" the couple speaks of is actually an interlocutory decree and that there only choices are MFS or MFJ. I did the MFJ/MFS comparision and it is MUCH better for them to file joint. This is no surprise to them....his attorney already suggested it and my understanding is that they are to share the refund/balance due. He is OK with that......However SHE wants to stick it to him and file as single/HOH and claim the kids because doing so would get her a large refund (EIC) and he would owe a ton....and in her mind, filing single would be a way around the joint sharing of refund/balance due.

What I need to explain to her is that even IF she was able to file as single, she might get a small EIC based on her income ($9,000), but would not get dependency exemptions and HOH because he (with $85,000 income and living with kids until October) would have provided more than 1/2 of the support for kids and keeping up the home which is in his name.

What I was hoping is to avoid the above conversation entirely by only having MFS/MFJ as available options for them.....Next year will be fun.

[joanmcq]

She can't file single or HOH. The choices are MFJ or MFS. She'll just have to live with that.

[Terry D EA]

I am sure glad others chimed in here. These rules seem to change all of the time and if it is something you don't deal with all the time, the water gets a little muddy. I think you need to look at KC's repsonse above and that may very well may enable you and your clients to come to a final decision. it is terrible that folks treat each other the way they do. For you, and moving forward, you should choose to prepare the taxes for only one of them as it puts you in an awkward situation and may present a conflict of interest if you assit both of them. JMHO

[jainen]

>>What I need to explain to her is that even IF she was able to file as single, she might get a small EIC based on her income ($9,000), but would not get dependency exemptions and HOH because he (with $85,000 income and living with kids until October) would have provided more than 1/2 of the support for kids and keeping up the home which is in his name. I was hoping is to avoid the above conversation entirely<<

Avoid the above conversation entirely. For one thing, it is irrelevant because she CAN'T file as single or HoH so she can't get EIC. (She could claim the exemptions since the children lived with her longer,)

As soon as she said she wants to stick it to him, you should have ended the engagement with her. Or him, if you prefer. If the lawyers negotiate for a joint return, fine. Otherwise pick your side because you can't do both. And if he is your client you can NOT tell her how much his income is, or anything else. On the other hand, if she is your client it may NOT be in her best interest to be taxed at 25% with no additional deductions, compared to 10% with at least some deductions.

So let the lawyers do the heavy lifting. My guess is (now that she knows the six month rule) she will go to a different preparer anyway.

[jainen]

>>SHE wants to stick it to him and file as single/HOH and claim the kids because doing so would get her a large refund (EIC)<<

By the way, HE has a perfect right to claim the qualifying children himself. That will force an audit, which he will lose under the tiebreaker rules. But it will also expose her fraudulent HoH filing which might trigger a 10-year EIC sanction! And using the kids for tax fraud can be an issue in determining custody.

[Lion EA]

The legal separation thing is a state thing. For instance, CT does not have legal separations; you are married or you are divorced. You're in OH? Any OH preparers know for sure if OH has a legal separation option? If not, your conversation with your client is very simple: MFS or MFJ. If MFS, prepare taxes for only one of them. If MFJ, get a conflict of interest signed by both. And for 2013, prepare taxes for only one of them.

[Janitor Bob]

In reading information about OH, it looks like Ohio allows for a legal seperation to legally state certain things, such as assets, dependency, etc, but Ohio still views a couple as legally married until one of the three decrees is final...dissolution, annulment, or divorce.

I informed clients that it was either MFJ or MFS....they wisely chose MFJ and will stop back (separately) and sign the 8879 and pay.....giving me separate checking accounts with which to split the Federal and Ohio refund direct deposits.

Next year, I think I will do his (since he is the on that originally contacted me) and tell the ex-wife to go elsewhere...I forsee issues and (as many have mentioned) predict conflict of interest on separate returns

[Jack from Ohio]

In reading information about OH, it looks like Ohio allows for a legal seperation to legally state certain things, such as assets, dependency, etc, but Ohio still views a couple as legally married until one of the three decrees is final...dissolution, annulment, or divorce.

I informed clients that it was either MFJ or MFS....they wisely chose MFJ and will stop back (separately) and sign the 8879 and pay.....giving me separate checking accounts with which to split the Federal and Ohio refund direct deposits.

Next year, I think I will do his (since he is the on that originally contacted me) and tell the ex-wife to go elsewhere...I forsee issues and (as many have mentioned) predict conflict of interest on separate returns

Very wise decisions and correct under tax law.

[BulldogTom]

In reading information about OH, it looks like Ohio allows for a legal seperation to legally state certain things, such as assets, dependency, etc, but Ohio still views a couple as legally married until one of the three decrees is final...dissolution, annulment, or divorce.

I informed clients that it was either MFJ or MFS....they wisely chose MFJ and will stop back (separately) and sign the 8879 and pay.....giving me separate checking accounts with which to split the Federal and Ohio refund direct deposits.

Next year, I think I will do his (since he is the on that originally contacted me) and tell the ex-wife to go elsewhere...I forsee issues and (as many have mentioned) predict conflict of interest on separate returns

Glad you got to where you needed to go. I could not tell you what you needed to find out, which is "what does legal separation mean in OH"? The tax law follows state law on that one, and I don't know OH law.

Tom

Hollister, CA

[Janitor Bob]

I hate getting new clients like this in April, but I must admit.....it made me smarter and better at my job.

[kcjenkins]

Excellent