Tips for Clients on Filing Personal Tax Returns

Tax season is upon us, so say my CPA clients who are now working diligently on Saturdays. The personal tax returns are due April 17th, but remember, April 14th is Good Friday and April 16th is Easter, so your CPA should have these returns done before April 13th. While this date may seem a long way off, that’s just 2 ½ months away. I don’t want you to have last minute stress with your spouse, so here are some helpful tips for you to consider.

1. If you are going to file a joint tax return, we generally request the spouses to sign a tax indemnification letter which requires each party to be responsible for the reporting of their respective incomes. In addition, the letter includes an agreement as to how the tax refund, if any, will be divided, or conversely, who will be responsible for the taxes owed.

2. If you are still married, in order to determine whether to file jointly or separately, you should request your CPA’s advice as to which filing status will be the most financially advantageous. Note that if you were still married at the end of 2015, you have the option to file jointly or separately.

3. Remember, some of your legal fees in the matrimonial action may be tax-deductible. Your CPA will be able to advise you which portion of your legal fees can be deducted, including but not limited to any discussions with your counsel on tax-related matters such as spousal maintenance or the tax impact of an equitable distribution award.

4. Spousal support is taxable to the recipient and deductible by the payor so long as there is a court order of support (and so long as the order does not state that the maintenance is non-taxable.) Spouses who are paying support voluntarily while the action is pending without a “so ordered” stipulation or court order in place will not be entitled to the deduction. Moreover, even if a court order is in place, if you file jointly, there will be no deductions for maintenance. If filing separately, spouses should ensure that their reporting of the maintenance payments match.

5. Most importantly, please contact me in advance to let me know what your plans are regarding filing the tax returns so that we ensure your spouse’s cooperation with as little drama as possible.