Divorce can bring many economic challenges — and you may be wondering whether filing for bankruptcy can offer you the fresh financial start you need. Although you can file for divorce and bankruptcy at the same time, doing so may not have the impact you intend. Significantly, not all debts can be discharged in bankruptcy, including those ordered to be paid in connection with the divorce proceedings.

Can You File for Divorce and Bankruptcy at the Same Time?

If you or your spouse incurred substantial debt during the course of your marriage, you might be considering whether filing for divorce and bankruptcy at the same time is a good idea. It’s not uncommon for spouses to incur a variety of debts during their marriage, including credit card debt, personal lines of credit, car loans, and mortgage payments.

Just as marital property must be equitably divided between spouses in divorce, marital debts must also be allocated and discussed as part of the dissolution of a marriage. The courts will address debts that are directly traceable to the acquisition of marital property. For instance, a judge may order that a spouse take full responsibility for an auto loan if he or she is getting the car or make mortgage payments on a former marital home in the divorce decree.

The Impact of the Bankruptcy Automatic Stay on Divorce

If you are considering filing for divorce and bankruptcy, it’s best to proceed with either the divorce or bankruptcy action first. This can help avoid the legal complications that can arise if both cases were brought at the same time. When a bankruptcy case has been commenced, it’s essential to understand that an automatic stay goes into effect.

Once you are in bankruptcy, the Court is precluded from making legal determinations about property that is subject to the bankruptcy proceedings. While the divorce case can proceed with resolving issues such as child custody, child support, and spousal support, marital assets cannot be divided until the bankruptcy case has concluded. Bankruptcy could potentially delay the divorce proceedings.

Filing for Joint Bankruptcy vs. Individual Bankruptcy

If you and your spouse have a large amount of marital debt, a joint bankruptcy filing can potentially wipe out all dischargeable marital debts that are owed by both of you — as well as your individual debts. However, it’s vital to be aware that a Chapter 7 bankruptcy can remain on your credit report for up to ten years, whether you file jointly or individually.

A Maryland family law judge will not reassign separate debts from one spouse to the other in divorce. Ultimately, a joint bankruptcy filing may not be the best way to proceed if there are few marital debts to be divided in divorce, and your spouse has many individual debts. It also may not be a viable option if you and your spouse are contentious and would not be able to cooperate during the bankruptcy proceedings.

Filing for Chapter 13 Bankruptcy and Divorce at the Same Time

If you do not qualify for Chapter 7 bankruptcy, you may have the option to file for Chapter 13. This type of bankruptcy filing allows you to reorganize your debt. However, there is a long repayment period of three to five years. This means that if you file jointly with your spouse before divorce, you would be involved in the legal process with them for a lengthy amount of time — and you would also be required to communicate with them. If you would rather settle your property division matters and move on to the next chapter of your life, this may not be the best course of action for you.

Can Divorce Debts Be Wiped Out in Bankruptcy?

Not all debts can be erased by filing for divorce and bankruptcy at the same time. Domestic support obligations ordered in divorce, such as alimony and child support, are considered priority debts. This means they cannot be wiped out in bankruptcy — and these obligations must continue to be paid once the automatic stay goes into effect.

In addition, if your spouse files for bankruptcy after the divorce has been finalized and the divorce decree assigns a debt to them, the creditor can still pursue the debt against you if your name remains on the account. It’s crucial to carefully review the divorce judgment to determine what is considered a domestic support obligation or a property settlement, to know what would be discharged if you or your spouse decides to file for bankruptcy following divorce. A knowledgeable divorce attorney can help you take proactive measures to safeguard your financial interests post-divorce.

Contact an Experienced Maryland Divorce Attorney

If you are wondering how filing for divorce and bankruptcy at the same time would impact your matrimonial matter, it’s best to consult with an experienced divorce attorney. At the Law Office of Shelly M. Ingram, our Fulton, Maryland divorce attorneys assist clients facing divorce with property division and debt allocation. All of our attorneys are trained in collaborative divorce, mediation, and traditional divorce litigation. We will work closely with you to find a strategy that will help you achieve the best possible outcome in your case.

To schedule a confidential consultation with an experienced Maple Lawn divorce attorney, call us at (240) 652-2596">(240) 652-2596 or contact us online.

Divorce doesn’t only end the marital relationship — it also addresses the economic aspects of your marriage. One way the court gathers information to make fair decisions about the financial matters that need to be decided in a divorce is by requiring each spouse to submit a detailed financial statement. If you are tasked with completing a financial statement in a Maryland divorce, it is crucial that the statement be complete and accurate to ensure an equitable distribution of marital property and avoid any unintended financial consequences in your case.

What is a Financial Statement in Divorce?

A financial statement is a detailed document that each spouse must submit in a Maryland divorce. It is meant to ensure transparency and provide the judge with a clear picture of each spouse’s income, expenses, assets, and liabilities, so that a fair decision can be rendered regarding child support, alimony, and property division. Notably, this form is not optional — it is a legal requirement in every case where child support, alimony, or attorney’s fees are at issue.

There are two versions of the financial statement: the long form and the short form. While the long form version has six pages and requires much more detail about monthly expenses and income, the short form (used for child support cases under a certain income threshold) only contains two pages. Specifically, the long form is required when an initial request for spousal support is made or in cases involving a spousal support modification. The parties must also complete the long form if child support is requested, and the combined income of the parties exceeds $30,000 per month.

What Information Should Be Included in Your Financial Statement?

The short form financial statement is used when child support is the primary issue that must be determined, and the combined household income is less than $30,000 per month. It is typically straightforward since it only requires you to disclose gross monthly income, child-only health insurance premium information, work-related childcare expenses, extraordinary medical expenses, monthly school expenses, and transportation costs for access between the parents’ homes.

The long-form financial statement requires much more detail. You must include information about your monthly gross income from all sources, including the deductions taken out for taxes and retirement. You must also document information regarding your monthly expenses:

• Residence — All costs in connection with your primary and secondary residence must be disclosed on the financial statement. This includes expenses incurred for mortgage or rent payments, homeowner’s insurance, taxes, gas and electric, heat, water, repairs, lawn care, carpet cleaning, painting, and more. You must also list costs of trash removal, telephone bills, domestic assistance, replacement furnishings, appliances, and any condominium fees.
• Household necessities — In this portion of the financial statement, you are required to document the costs of food, household supplies, drug store items, and other household necessities.
• Medical and dental costs — A financial statement requires you to list medical and dental costs incurred by both you and your children. This includes expenses for health insurance, therapy, dental care, glasses, and extraordinary medical care.
• School expenses — School expenses must be disclosed on a financial statement, including the costs of tuition, books, lunch, extracurricular activities, uniforms, clothing, and daycare or nursery school.
• Recreation and entertainment — You must provide the court with a detailed breakdown of the costs incurred in connection with vacations, videos, theater, dining at restaurants, cable TV and internet, camp, lessons, memberships, and other extracurricular activities.
• Transportation — The long form requires you to disclose details regarding any car payments, repairs, auto insurance, parking fees, and public transportation costs.
• Gifts — Holiday and birthday gifts must be disclosed on the long form, as well as charitable donations.
• Clothing — The costs of clothing purchases, laundry, alterations, and dry cleaning must be listed on the financial statement.
• Incidentals — The form accounts for incidentals, such as books, magazines, newspapers, stamps, and banking expenses incurred on a monthly basis.
• Miscellaneous — Other miscellaneous expenses must be included on the long form financial statement, such as alimony or child support from a previous order, religious contributions, haircuts, manicures, life insurance, and expenses related to pets.

Other information that must be disclosed on a long-form financial statement in a Maryland divorce includes assets and liabilities. Assets can include real estate, bank accounts, furniture, stocks, personal property, jewelry, vehicles, and other marital property. Liabilities may include bank loans, mortgages, automobiles, notes payable to relatives, and credit card debt.

Depending on the specific financial issues in your case, you may be required to provide supporting financial documentation, appraisals, or professional valuations. Your attorney can best advise regarding the information you will need.

Why is Accuracy Important in a Financial Statement in a Maryland Divorce?

The financial statement in a Maryland divorce is highly detailed and can take a considerable amount of time to complete. It’s important to be accurate when filling out a financial statement and not to rush through completing it — the court will use the information in this document to determine your financial position.

Failure to complete the form accurately can result in costly consequences. Not only might you not receive the relief you’ve requested, but you may also leave yourself open to attack by your spouse during a deposition. In addition, an incorrect financial statement can impact your credibility in the eyes of the court and drive up the costs of divorce proceedings. If certain assets weren’t disclosed, additional time and resources may need to be dedicated to investigating the missing information.

Common Mistakes to Avoid on a Financial Statement

There are several common mistakes that people often make when preparing financial statements. The following errors can easily be avoided to help ensure the divorce process runs smoothly and you are not left open to potential challenges brought by your spouse:

• Not understanding your expenses — List your expenses accurately on the form, rather than estimate them.
• Listing an expense more than once — If you list an expense in one section of the financial statement, you cannot also list it in another section
• Understanding the number of pay periods and bi-weekly cycles in a year - there are 26 two (2) week cycles in a year. You can’t simply multiply a bi-weekly expense by two (2) to arrive at the monthly number. You must multiply by twenty-six (26) and divide by twelve (12).
• Forgetting about annual expenses — While the form asks you to list monthly expenses, some expenses are incurred annually and need to be taken into account.
• Using payment amounts that are no longer valid — Be sure to use the amount of current payments for expenses incurred, rather than past payment amounts.
• Failing to distinguish between your expenses and those of your children — The long form requires you to distinguish between your own expenses and those of your children. While some expenses benefit both you and your children, it’s vital to keep good records and seek the advice of an attorney when filling out the form.
• Not consulting with a lawyer before filling out the form — The financial statement is a complex and confusing document. Your attorney can answer any questions you have and advise you on how to fill it out to ensure it is thorough and accurate.

Significantly, the financial statement is a court document that is signed under oath — this means that you are affirming the truthfulness of the contents in the document under penalty of perjury. If the court finds that you are willfully concealing financial information, various penalties can be imposed, including contempt of court. Deliberately hiding income can also result in your spouse being awarded a larger portion of the marital assets.

Contact an Experienced Maryland Divorce Attorney

Completing a financial statement in a Maryland divorce can be overwhelming and stressful. It’s essential to have a compassionate divorce attorney who can help you navigate the process. At the Law Office of Shelly M. Ingram, our Fulton, Maryland divorce attorneys work closely with our clients for a wide variety of divorce and family law matters. Trained in collaborative divorce, mediation, and traditional divorce litigation strategies, we work closely with our clients to achieve a positive outcome in every case.

To schedule a confidential consultation with an experienced Maple Lawn divorce attorney, call us at (240) 652-2596">(240) 652-2596 or contact us online.

If you and your ex share children, a question you might have around tax season is, “What happens if both parents claim a child on taxes?” Although your divorce decree should specify which parent gets to claim the dependent tax deduction, it’s not uncommon for disputes to arise regarding this matter. Importantly, if both parents claim the deduction, the IRS will reject the second filing — even if it was filed by the custodial parent.

Who is Allowed the Dependent Tax Deduction?

The dependent tax deduction is typically filed by the custodial parent. But it’s essential to verify that you are able to claim the deduction under the IRS’s guidelines. The IRS has its own rules concerning who qualifies as a dependent — and which parent gets to claim the tax deduction.

In order to claim the IRS deduction, the following criteria must be met:

• The child must be related to you — The child can be your biological child, stepchild, foster child, or adopted child.
• The child must be under 19 — To claim your child on your taxes, they must be under the age of 19. But if they are a full-time student, they can be under 24. If the child is totally and permanently disabled, there is no age limit.
• The child must live with you — The child must reside with you for more than half the year.
• The child must be financially supported by you — You must provide the child with more than half their financial support.

While the child’s residency is usually determinative of which parent is entitled to file the deduction, there is an exception to the IRS’s criteria for divorced parents. The custodial parent can enter into a stipulation with the non-custodial parent and agree to allow them to claim the child. However, it’s important to be aware that a divorce decree cannot be enforced by the IRS. In order to relinquish the claim, the custodial parent would need to file Form 8332 with the IRS.

If custody is shared 50-50, and the child spends the same amount of time with each parent, the parent with the higher adjusted gross income would be eligible to claim the deduction under the IRS’s rules.

What Happens if Both Parents Claim a Child on Taxes?

Only one parent at a time is permitted to file the dependent tax deduction. If your ex and you both file a tax return claiming your child as a dependent, you might wonder, “What happens if both parents claim a child on taxes?” Specifically, if a parent e-files a tax return with a child’s tax ID number, the IRS will reject any subsequent e-filed return claiming the same child — even if the return filed first was amended to remove the dependent. Any subsequent returns that are e-filed in the same tax year would need to be paper filed. If neither parent corrects the error, the IRS may audit one or both of their returns.

Beginning in tax year 2025, the IRS will accept a second tax return claiming the dependent if the first taxpayer includes their Identity Protection Personal Identification Number. Although this doesn’t necessarily mean that the person filing the second return would be entitled to claim the child, their e-filed return would not be outrightly rejected.

How Can Parents Resolve Disputes Regarding the Dependent Deduction?

If your ex filed their tax return and claimed your child as a dependent when you believed you were entitled to do so, first check your divorce decree to see whether there are any provisions addressing this matter. In the event your ex made an error in filing for the dependent tax deduction, you may be able to reach an amicable resolution. Possible solutions in such cases may include the following:

• Asking your ex to refile their taxes
• Alternating the tax years, the child can be claimed
• Allowing each parent to claim a different child if you have more than one
• Requesting monetary payment from your ex to make up for the difference
• Allowing the parent who contributes more toward the child’s care to claim the deduction

The IRS’s rules regarding the dependent tax exemption are in place to ensure fairness. If parents cannot agree who is permitted to claim the child, the IRS will use the information it has to make the determination for them. Nevertheless, parents can ultimately decide between themselves who will get to claim the child. It’s essential to have a discussion with your ex to avoid any issues when it is time to file your taxes. Mediation can often be useful to facilitate communication and help you and your ex reach an agreement that works for everyone — and is in the best interests of your children.

Contact an Experienced Maryland Divorce Attorney

If you are wondering, “What happens if both parents claim a child on taxes?” it’s vital to consult with both a tax professional and a knowledgeable divorce attorney who can best advise you. While an accountant or tax advisor can explain the potential tax implications, a divorce attorney can assist you with working out a settlement agreement regarding custody and financial matters. At the Law Office of Shelly M. Ingram, our Fulton, Maryland divorce attorneys are committed to providing our clients with trusted legal services for a broad scope of divorce and family law matters. Trained in collaborative divorce, mediation, and traditional divorce litigation strategies, we work diligently to achieve a positive outcome in every case.

To schedule a confidential consultation with an experienced Maple Lawn divorce attorney, call us at (240) 652-2596">(240) 652-2596 or contact us online.

Disclaimer: The attorneys at The Law Office of Shelly M. Ingram are not accountants or tax professionals, and cannot offer tax advice. Please consult a qualified tax professional for assistance with your specific situation.

Almost nobody enjoys going through a divorce. Likewise, most people dread preparing and filing their taxes. Unfortunately, many people have to do both. If you are one of these people, you may quickly realize that filing taxes after divorce, or even during the process, involves unexpected challenges.

This is especially true if your former spouse took charge of tax filing. But even if you have always prepared your own taxes, you may have questions about the financial consequences of divorce and how to file taxes after divorce.

How Do I File Taxes if I Am Married, but Separated?

If you are still legally married as of December 31 of the tax year, even if you have been separated from your spouse, you are still married in the eyes of the IRS for purposes of filing taxes for that year. You and your spouse can still file “married filing jointly,” if you wish; that filing status may offer you the most favorable results. If you do not wish to file a joint return, you can file as “single” or “head of household,” if you qualify.

When Are My Spouse and I Considered No Longer Married for Tax Purposes?

Your marital status as of December 31 is what matters. If your divorce is final as of December 31, you cannot file your income taxes as either “married filing jointly” or “married filing separately” for that tax year, even if you were married for nearly the entire year. If you qualify, you may file as “head of household”; if not, you must use the “single” filing status.

How Do I Know if I Qualify to Use the “Head of Household” Tax Filing Status?

Filing as head of household offers better tax benefits than filing as “single,” but you must meet certain criteria to qualify for this status. In order to be considered “head of household” for tax purposes, you must:

• Be unmarried or legally separated as of December 31 (note: there is no “legal separation” in Maryland)
• Pay more than half the cost of maintaining a home
• Have a dependent child (or other dependent) living with you for more than half the year

Speak to your divorce attorney or tax preparer to see if you are eligible for head of household status.

How Do I Amend a Joint-Filed Tax Return After Divorce?

It’s not uncommon to make an error when filing your taxes, which is why the IRS provides an avenue (Form 1040-X) to amend previously-filed tax returns. How to amend a joint-filed tax return depends on the nature of the need for amendment. For instance, you may have incorrectly recorded your income or your tax deduction or credits, or may have inadvertently filed using the wrong status.

You and your ex-spouse will both need to sign Form 1040-X unless you have the authority to file it alone, such as if you are only amending your own information. If the amendment will change the income, deductions, or tax liability for both of you, you will probably both need to sign.

If your spouse refuses to sign, consult your divorce attorney for the next steps.

Who Gets to Claim Our Child on Their Tax Return After a Divorce?

Only one divorced parent can claim a child on their tax return. The IRS gives a parent with whom a child lived for more than half the year the right to claim the child as a dependent. However, if the custodial parent wishes, they can release this right to the other parent using IRS Form 8332. Even if the divorce settlement grants the non-custodial parent the right to claim the child, the IRS still requires the custodial parent to complete and sign this form.

If the child spends time with both parents equally, the parent with the higher adjusted gross income (AGI) has the right to claim the child, absent an agreement or court order that states otherwise.

Do I Have to Pay Tax on My Divorce Settlement?

As a general rule, the IRS does not require former spouses to pay tax on property transfers between them that are “incident to a divorce.” Transfers are usually assumed to be “incident to a divorce” if they are part of the terms of the divorce settlement, or happen within a year of the marriage’s end. However, you may find that you owe capital gains tax if you liquidate assets from your property settlement that have appreciated in value since you and your spouse acquired them.

Can I Deduct Alimony or Child Support Payments Made to a Former Spouse?

Prior to 2019, alimony was considered taxable income to the recipient, and payments were tax-deductible for the person making the payment. That is no longer true. Alimony is not taxable to the recipient nor deductible to the payor. Similarly, child support is not considered income to the parent receiving it, and cannot be deducted from income by the parent paying it. Parents are obligated to support their children whether or not the child lives with them all the time, so that makes sense.

Work With an Experienced Maryland Divorce Attorney

If you have questions about how to file taxes after a divorce, you don’t have to figure it out alone. At the Law Office of Shelly M. Ingram, our divorce attorneys understand the complexities of tax and divorce. To schedule a confidential consultation with an experienced Maple Lawn divorce attorney, call us at (240) 652-2596">(240) 652-2596 or contact us online.

Marriage is just as much a financial relationship as it is an emotional one. Importantly, the financial consequences of divorce are far-reaching and go beyond the question of who gets the house and other marital property in Maryland. In fact, the economic implications of divorce can impact you for years to come. It’s essential to have a solid understanding of your financial situation if you’ve decided to part ways with your spouse in order to make informed decisions and safeguard your assets.

Division of Marital Property

Whatever property or assets one spouse acquires during the course of a marriage, regardless of title, is considered marital property in Maryland and belongs to both spouses. Under the state’s equitable distribution laws, marital property must be divided fairly when a couple parts ways. Dividing marital assets is a significant financial consequence of divorce — especially for spouses who have been married for a lengthy period of time. In a long-term marriage, spouses may acquire substantial property that must be divided, including real estate, bank and retirement accounts, vehicles, furnishings, business interests, and investments.

Debt Allocation

Just as marital property in Maryland must be divided, debts — such as mortgages, car loans, and credit card debt — must also be considered when marital property is divided. Most debts are contractual in nature, for example: a mortgage, a car loan, or credit card debt. If the Court is transferring a house or awards a car to one party or the other, the Court will transfer these assets with consideration given to the underlying debt. This will often require that the spouse receiving the asset be required to refinance or otherwise assume sole liability for the underlying debt. If unsecured marital property has a debt (for example, a TV, a computer, or something else that is financed), the Court will often transfer that property to the person who remains responsible for the debt. Alternatively, if the debt is owed on a joint credit card, the Court will consider the remaining liability as part of the overall “equitable” distribution of marital assets. The Court will not reallocate a joint credit card debt, and generally speaking, the Court cannot reallocate individual credit card debt. However, that debt will be considered, and the Court will endeavor to fashion an equitable distribution of marital property.

Division of Retirement Assets

Retirement funds that were accumulated during the marriage are classified as marital property and subject to division when spouses part ways, even when those assets are only titled in one party’s name. This can have a major impact on a spouse’s financial security and standard of living after divorce. There may also be early withdrawal penalties and other tax implications when it comes to transferring retirement assets, if the transfers are not addressed at the appropriate time and in a tax-advantageous manner. In some cases, a spouse might have to postpone retirement if a significant portion of his or her retirement account is allocated to the other during divorce proceedings.

Impact on Your Credit Score

Although divorce itself doesn’t impact your credit score directly, there may be other aspects of your divorce that will affect your credit report. Notably, the impact of divorce on your credit score has to do with how your finances are handled during and after the divorce process. For example, if you share any joint liability accounts with your spouse, and a payment is missed, you may see a decrease in your individual score. Ideally, you should establish separate accounts and work together to divide, transfer, and/or close joint credit cards depending upon your individual circumstances. You may also want to remove your spouse as an authorized user on any individual credit cards that remain, or establish spending caps to ensure that unauthorized charges are not assessed. Regularly review your credit reports to identify whether there are any issues or unauthorized activity.

Increased Living Expenses

Going from a household supported by two incomes to a single-income household after divorce can be financially challenging. Often, it is helpful to create a post-divorce budget to account for new and often increased costs for mortgage or rent payments, utilities, groceries, and childcare. It can also be helpful to track your expenses to see where you might be able to cut back and make adjustments to old routines. Your attorney may be able to work together with a financial advisor to assist with the development of a new financial plan to ensure you manage your finances effectively during the divorce process and after.

Tax Implications

There are many tax consequences in divorce that may result from the division of marital property, transfer of assets, and sale of real estate. For divorces finalized after January 1, 2019, alimony payments are no longer tax-deductible for the paying spouse, and the recipient receives the payments tax-free. Child support payments are not tax-deductible by either the payor or the recipient, though there may be tax credits or benefits that stem from child-related expenses and custody.

Loss of Health Care Coverage

For many spouses, one of the biggest financial consequences of divorce has to do with health care coverage. If you were on your spouse’s health insurance, you would lose your coverage once your divorce is finalized. While you might be eligible for COBRA insurance, this can be costly — and it only lasts for 36 months. You may need to explore other options, such as obtaining health benefits through your own employer or the Affordable Care Act marketplace.

Attorney Fees and Court Costs

Attorney fees and court costs can quickly add up in a litigated divorce. However, it’s important to understand that methods of alternative dispute resolution, such as mediation or collaborative divorce, can lessen the amount of time it takes to divorce and reduce the overall costs associated with the process. Mediation and collaborative are both non-adversarial and may make it possible to avoid lengthy court proceedings. These out-of-court process options encourage spouses to work together to reach a divorce agreement amicably, peacefully, and respectfully.

Contact an Experienced Maryland Divorce Attorney

If you are parting ways with your spouse or have questions concerning the division of marital property in Maryland, it’s vital to have a knowledgeable divorce attorney who can explain the financial consequences of divorce. At the Law Office of Shelly M. Ingram, our Fulton, Maryland divorce attorneys are dedicated to providing our clients with trusted legal services for a wide variety of divorce and family law matters. Trained in collaborative divorce, mediation, and traditional divorce litigation strategies, we work closely with our clients to achieve positive results in every case.

To schedule a confidential consultation with an experienced Maple Lawn divorce attorney, call us at (240) 652-2596">(240) 652-2596 or contact us online.

Do I Have to File Taxes with My Spouse if We Are Separated?

A divorce can take several months or even years to finalize, depending on the complexity of the issues in your case. If you are in the process of divorce and physically separated, you may be wondering, “if I am separated, how do I file taxes?” While many people default to doing what they’ve done during their marriage, such as filing a joint tax return, it’s crucial to understand that other options may exist*.

What are Your Options to File Taxes if You’re Still Legally Married at the End of the Year?

While we are not accountants and cannot offer specific tax advice, what tax filing status should I choose is a question we frequently receive this time of year. The answer will depend upon your marital status as of December 31 of a particular tax year. For the purposes of the Internal Revenue Service (IRS), you are considered married for the entire year, if by December 31 you have no divorce decree or separate maintenance decree in place at that time. Even if you have lived apart the whole year, you will not be eligible to file as “single” unless you have an agreement that complies with IRS requirements.

If you’re legally married at the end of the year, you must file as “married” for that tax year and choose one of the following filing statuses:

• Married filing jointly — On a joint tax return, you report your combined income and deduct your combined allowable expenses. In many cases, by using the married filing jointly status, you can lower your tax burden. Under very specific circumstances, you might even be relieved from liability for taxes that are owed on a joint return through tax relief for spouses.
• Married filing separately — If you file a separate tax return from your spouse, you will report your own income, deductions, and credits on your own individual return. You will be responsible only for the tax that is due on your specific return.
• Head of household — In the event you’re still married or legally separated at the end of the year, you or your spouse may be eligible to file as head of household if your spouse did not live in the home for the last six months; you paid more than half the cost of keeping up your home for the year; and your home was the primary residence of your dependent child for more than half the year.

If you are separated, how you file taxes can have a significant impact on your financial situation. If you need specific advice regarding tax law, please consult a tax attorney or an accountant.

Importantly, the parent who has custody of a child can claim them on their tax return. If parents share custody 50-50 and are not filing a joint tax return, they will have to decide between themselves who will claim the child.

Should You File Jointly or Separately?

It’s crucial to consider the implications of filing jointly versus separately and the impact it may have on your situation. Notably, your income tax filing status affects the rate at which you are taxed and determines which tax credits you may be eligible for. While filing a joint tax return can often result in lower tax liability than filing separately, you must carefully consider whether there are financial benefits in doing so. The IRS advises taxpayers to calculate their tax liability under both scenarios to determine which is more advantageous. The tax planning software used by most accountants will automatically generate this comparison.

For tax year 2023, married taxpayers filing separately can get a standard deduction of $13,850. By contrast, joint filers can take a $27,700 standard deduction. Joint filers may also be able to qualify for several tax credits, including the Earned Income Tax Credit (EITC) and the Child and Dependent Care Tax Credit.

What are the Benefits and Drawbacks of Filing Jointly?

Although having a lower tax bill is desirable, it shouldn’t be the only consideration when it comes to deciding whether to file jointly or separately. If you are separated, how you file taxes can depend on your relationship with your soon-to-be ex-spouse and your respective financial situations. When you file a joint tax return, you are jointly responsible for any taxes due, penalties that have been incurred, and interest that has accrued. This means that if your spouse avoids responsibility for paying the tax bill, you could be liable for paying the whole thing — if this is a possibility, it may be best to file separately.

If your spouse has taken certain actions throughout the tax year — such as taking untaxed distributions from a retirement account or under-withholding their income, there may be additional taxes owed. In such cases, your tax bill might be higher, but probably not as high as the tax bill for both of you. In the event your spouse misreports their income, wrongly claimed tax breaks, or did not pay their share of taxes — and you did not have knowledge of the error — you might be eligible from relief for their debt by filing a Request for Innocent Spouse Relief (Form 8857).

Depending on your circumstances, there may be several other things to think about when deciding whether to file jointly or separately. For instance, you might not be able to take a deduction for student loan interest if you are married and file separately. You may also be limited to a smaller deduction for contributions to individual retirement accounts (IRAs). If being able to deduct capital losses is important to you, it’s essential to be aware that on a separate return, you may only be able to deduct $1,500, rather than the $3,000 that is permitted on a joint return.

When is it Best to File Separately?

If you are separated, how you file taxes can depend upon a number of factors. There are a number of scenarios in which filing separately may provide a financial benefit. For example, if one spouse, particularly the lower-earning spouse, had a substantial amount of out-of-pocket medical expenses during the tax year, more may be deducted by filing separately. Your ability to deduct medical expenses is a function of your adjusted gross income (AGI) — and you may only be able to deduct those expenses that exceed 7.5% of your AGI. With a lower AGI, the threshold at which you can begin to deduct medical expenses would also be lower.

Generally, if your spouse’s financial situation creates a liability for you, it may be best to file your taxes separately. It’s a good idea to consult with a tax attorney or tax preparer who can best advise you regarding your options and help you determine what tax filing status is most advantageous for you.

Contact an Experienced Maryland Divorce Attorney

At the Law Office of Shelly M. Ingram, our Fulton, Maryland divorce lawyers are committed to protecting our client’s legal and financial interests. Trained in collaborative divorce, mediation, and traditional divorce litigation strategies, we will work to help you obtain the best possible outcome in your case

If you are separated, how you file taxes can have a significant impact on your financial situation. It’s vital to discuss the pros and cons with an experienced attorney and a tax professional to help ensure you understand your options and make a decision that will be in your best interests. At the Law Office of Shelly M. Ingram, our Fulton, Maryland divorce lawyers are committed to protecting our clients’ legal and financial interests. Trained in collaborative divorce, mediation, and traditional divorce litigation strategies, we will work to help you obtain the best possible outcome in your case. To schedule a confidential consultation with an experienced Maple Lawn divorce attorney, call us at (240) 652-2596">(240) 652-2596 or contact us online.

You may also be interested in:

Managing Unexpected Expenses in Divorce

What is Income for Child Support Purposes?

*The Law Office of Shelly M. Ingram hopes you find this article to be a helpful starting point for questions that you may have about your tax filing options. The Law Office of Shelly M. Ingram, LLC is not an accounting firm and cannot offer any tax advice or legal advice on matters related to tax law. The law and the IRS regulations change regularly and the outcome of any legal matter depends on its unique circumstances. If you need specific advice regarding tax law, please consult a tax attorney or an accountant.

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Maryland Family Law Attorney

No one needs extra, unexpected expenses that challenge your budget and put your future goals at risk in divorce or otherwise. Choosing to retain a family law attorney to handle your divorce or navigate a high-conflict custody dispute may initially seem costly. However, this investment can ultimately prove invaluable in safeguarding your interests, ensuring a fair resolution, and lowering total legal fees. Before you agree to a settlement that isn’t in your best interest, try taking these steps to keep attorney fees in check.

Understanding Attorney Retainers Can Lead to Lower Legal Fees

When you first hire an attorney, you will likely sign a retainer agreement that promises you will pay a certain amount before the case begins to secure legal representation and get the lawyer working for you. It’s important to understand that unless you specifically agree to a flat fee, this retainer doesn’t necessarily represent the total cost of your case. In many cases, attorneys charge fees on an hourly basis that are billed against that retainer. No one – not even your lawyer – can know exactly how many hours of work your case will require. But there are some things you can do to streamline your case and lower your legal fees:

1. Stay Organized to Save Money

At the Law Office of Shelly M. Ingram, our divorce attorneys know how to get you a fair resolution in your divorce that will protect you and your assets, without spending all your money on attorney fees. Contact us today to schedule a consultation with an attorney to discuss your situation.

Your attorney should send you copies of everything in your case: court filings, documents received, letters to opposing counsel or parties, everything. If you keep an organized file of these documents, it will be much easier for you to stay on top of your case and avoid running up unnecessary legal fees. For example, if you are unsure when your next hearing is – calling your attorney to find out will cost you, but looking through your files is free. You can also check the status of your case online by using the Maryland Judiciary Case Search.

Staying organized at home is also a money saving tip. You should keep your own documents organized – emails, pay stubs, bank statements, household bills, etc. That way when they become relevant to your case, you will have the documents on hand. This will save money since your attorney will not need to file subpoenas or discovery demands to get copies from the bank, creditor, or your spouse.

2. Save Money by Saving Time: Keep Meetings Short and Productive

It is important to have a good relationship with your attorney, but that doesn’t mean they are your best friend or confidante. Depending on your case, you may not have to meet with your attorney often, but you will certainly have meetings at various points throughout your case. It’s easy to walk into a meeting, start talking, and get off topic. As the time ticks on, the related attorney fees add up.

This means if you are looking for ideas for saving money in your divorce, you need to make the most of your time with the lawyer. Come to your meeting with your homework done. If your attorney has not provided you with an agenda, ask for one. Make sure to bring in any documents your attorney requested. Write down your questions and bring them with you (or better yet, send them in advance). Think about which route you want to take with previously presented options and review any information (such as proposed settlement agreements) your attorney sends you ahead of time. That way, you can save time and save money by keeping the meeting focused on answering your legal questions and avoid paying for your attorney to watch you read.

3. Lower Legal Fees by Limiting Your Attorney’s Role

You retain your attorney to provide you legal advice and answer questions and concerns you have throughout your case. Unfortunately, many people find it difficult to limit contact with their attorney to this advisory role. You may find yourself emailing or calling your attorney because you are upset, or just want to talk about your case, without any need for legal advice. Because your attorney is on the clock, any time you do this it only adds to your legal fees.

The next time you are about to send an email or call your attorney, ask yourself if you actually have a legal concern, or if you are upset about something else. If it’s the latter, try calling a friend, therapist, or other professional. Venting to your attorney may make you feel better, but it is a costly option. You should also feel free to assemble a divorce team, which may include an accountant, therapist, or divorce financial planner.

4. Money Saving Tip: Offer to Help With Your Case

A lot of times divorce and custody cases require work to be done that isn’t purely legal. There may be documents to be organized, records to review, discovery questions to be answered, and paperwork to be organized, copied, and sent to opposing counsel or the court. You can do much of this yourself as a way to save money.

Offer to obtain records and documents from schools, banks, and other sources so that they do not need to be requested by your lawyer. Take it on yourself to go through financial records and highlight rent payments or other relevant transactions. Get an electronic copy of interrogatories and type out your own responses to discovery requests. Each of these activities can cut significant time off your attorney’s billable hours, leading to significant money savings for you.

5. Listen to Your Attorney to Avoid Unnecessary Legal Fees

One of the most expensive mistakes you can make in a divorce or custody action is to ignore your attorney. Your attorney may ask you for the same information multiple times. They may tell you to do something, but then you do the complete opposite. This can lead to additional motions and court hearings, and all that adds up to extra attorney fees you have to pay!

To save money on legal fees, listen to your attorney. After all, you hired your attorney for legal advice. If your attorney asks you to provide information, don’t make her ask twice. If she tells you not to contact your spouse, don’t contact your spouse. Your attorney is looking out for your best interest and advocating on your behalf, but the more work your attorney has to do, the more it will cost!

Hiring an experienced divorce attorney can seem like it takes a lot of money. But there are money saving tips that you can use to lower your legal fees and stay in control of your finances during divorce. At the Law Office of Shelly M. Ingram, our divorce attorneys know how to get you a fair resolution in your divorce that will protect you and your assets, without spending all your money on attorney fees. We have strategies to help you resolve the various issues that could arise in your divorce, saving you time, frustration, and possibly money. Call (240) 652-2596">(240) 652-2596 or contact us today to schedule a consultation with an attorney.

Many Maryland families depend on government social security benefits and social security disability insurance payments to pay their bills. When those families fall apart, it may be hard to understand where those payments will go. You may have questions about how divorce affects social security benefits for the recipient, your former spouse, and your children.

SS Benefits and Divorce

When planning for retirement, most older Maryland couples count on receiving social security retirement benefits as part of their income. However, divorce can change those calculations. If you were planning to receive social security based on your spouse’s income, you may be concerned about your right to receive SS benefits after divorce.

Your entitlement to SS benefits based on your spouse’s income depends on:

• your spouse’s work history
• your own work history
• the length of your marriage
• your age when claiming benefits

Even a stay-at-home parent and homemaker can be entitled to spousal benefits based on their spouse’s social security amount starting at age 62. They will also qualify for Medicare at age 65. However, if you are below the full retirement age (between 65 and 67, depending on the year of your birth) or are working while receiving benefits it can reduce the amount of monthly social security benefits you receive.

This remains true throughout the divorce process. Sometimes former homemakers find themselves needing to work to support themselves during separation or divorce. If you do, be sure to consider how that additional income may affect your entitlement to social security benefits.

Can a Former Spouse Receive Social Security Benefits?

If you need help understanding how divorce will affect social security retirement or disability benefits, for you, your former spouse, and your children contact us today to schedule a confidential consultation with a family law attorney.

Qualifying ex-spouses may receive up to one half of your retirement benefit amount. However, this does not decrease your retirement benefits. If your former spouse makes an application to collect social security under your work history, he or she will receive social security benefits directly from the government. Your former spouse may receive social security benefits based upon your work history (even if you have remarried) if:

• You are entitled to social security retirement or disability benefits
• Your marriage lasted at least 10 years
• Your divorce occurred at least two years ago (if you have not applied for retirement benefits)
• Your ex-spouse has not remarried
• Your ex-spouse is at least 62 years old
• Your ex-spouse’s own work history (100% benefit) is less than the benefit they can receive based upon your work history (50% benefit).

However, there is a limit to the maximum family benefits the government will pay. If you have children, a current spouse, and a former spouse who are each claiming benefits on your record, the maximum amount the entire family can claim is between 150 to 180% of your full retirement benefit. In calculating this, your former spouse’s retirement benefits based on their own work history is paid first. Only the increased benefit amount will count toward your maximum family benefit.

SSDI Disability Benefits and Divorce

Social Security Disability Insurance (SSDI) benefits are paid based on a person’s physical or mental disability interfering with their ability to work. SSDI benefits are generally not considered marital property to be divided in divorce. However, if those benefits were received during the marriage and placed in a joint bank account, that account can be divided during divorce.

SSDI may not be considered a marital asset, but it is considered income for the calculation of alimony and child support. If one spouse is disabled and the other has historically provided support, the provider spouse may be ordered to pay rehabilitative or indefinite alimony to help them pay their bills. However, the amount of alimony awarded will be based on multiple factors, including the disabled spouse’s access to government benefits. If you receive SSDI at the time the divorce is entered, it will likely reduce the amount of alimony you are entitled to receive.

Dependents’ Benefits and Child Support

Your biological, adopted, and stepchildren are entitled to receive dependents’ benefits under either your social security retirement or SSDI benefits. Certain dependent grandchildren also apply. To receive dependent benefits, a child must be:

• Unmarried and
• Under 18,
• Between 18 and 19 (and two months) if still a full-time high school student, or
• Have a disability that started before age 22

Just like a spouse, if your child works while receiving benefits, their benefits will be reduced based on the amount they earn. However, your benefits will not change.

In addition to any dependents’ benefits your children may receive, your SSDI payments may be garnished to help pay for court-ordered child support. That is because SSDI is considered income for support purposes. However, if your children are receiving dependents’ benefits, that amount will count toward support first, before dipping into your own payments. If you have not applied for dependents’ benefits for your child already, doing so can increase the total money available to pay for your child support.

At the Law Office of Shelly M. Ingram, our divorce lawyers want to help you protect your government benefits, and make financial decisions that are best for you and your children. If you need help understanding how divorce will affect your social security retirement or disability benefits, contact us today to schedule a confidential consultation with an attorney.

If you have questions or concerns regarding your social security benefits we encourage you to also contact the Social Security Administration. To find a field office in your area visit the online Social Security Office Locator. For general questions, contact the Social Security national office at (240) 652-2596">(240) 652-2596.

Financial troubles are one of the top causes of divorce and marital discord. When debts outweigh assets and your monthly payments eat up most of your income, you and your spouse may need to resort to a bankruptcy to resolve your debts, even as you consider using divorce to dissolve your marriage. Understanding how bankruptcy may affect your divorce, and vice versa is important to making the right decisions, in the right order.

Shelly Ingram is a family law attorney, not a bankruptcy lawyer. If you are considering bankruptcy, it is important to speak to someone with experience in bankruptcy law about the effect your divorce may have on those proceedings.

Filing for Divorce and Bankruptcy at the Same Time Causes Problems

If financial problems have driven you into two lawyers’ offices, you may want to resolve the divorce and bankruptcy at the same time and just get it all out of the way at once. Unfortunately, federal bankruptcy laws may make that difficult. Every bankruptcy petition filed triggers an “automatic stay”. That puts a hold on any attempts to collect on your debts, which is often a relief. However, it may also prevent your Maryland divorce from resolving.

Unlike in other states, Maryland family law judges will not reassign debts from one spouse to another. Because those debts are not “at issue” in the divorce, the legal proceedings in your case can continue even while the automatic stay is in place. However, practically speaking, a pending bankruptcy action may prevent either spouse from refinancing property, assigning bank accounts, or taking other steps to divide the family’s assets. Even if you can get divorced while your bankruptcy is pending, you may not be able to do what it takes to put your judgment of absolute divorce into effect until the discharge order has been entered.

What Happens If You File for Joint Bankruptcy Before Divorce?

In many cases, the better option is to complete a joint bankruptcy first, before filing for divorce. By cooperating with one another through the bankruptcy process you can share the cost of the bankruptcy attorney and reduce the bankruptcy court fees. Depending on your circumstances, you may even be able to protect more of your property through bankruptcy exemptions as a married couple than as two single individuals. However, those details are best discussed with your bankruptcy attorney before filing either case.

Filing for joint bankruptcy before divorce can also simplify your divorce process. Because most of the family’s debts will be resolved or discharged in the bankruptcy, it may be easier to negotiate a settlement on the property issues in your divorce.

When It Makes Sense to File for Divorce First

The type of bankruptcy you choose could also affect the order of the cases. While a Chapter 7 bankruptcy is resolved quickly (usually in a matter of months), a Chapter 13 bankruptcy payment plan extends for 3 to 5 years.

The type of bankruptcy you choose could also affect the order of the cases. While a Chapter 7 bankruptcy is resolved quickly (usually in a matter of months), a Chapter 13 bankruptcy payment plan extends for 3 to 5 years. During that time, the petitioners agree not to take on any new debt without court consent. That may include hiring a divorce lawyer or taking out a new mortgage to buy out your spouse’s equity in the marital home. Also, having a bankruptcy on your credit history can affect your ability to obtain financing. If you believe you will need to refinance as part of your divorce settlement, or if you are worried about staying married while the bankruptcy is pending it may be better to wait to file until after the divorce is finished.

What Happens if One Spouse Declares Bankruptcy After Divorce?

If bankruptcy is in either spouse’s future it is important to know that when you are negotiating the terms of your divorce. Under Maryland law, the name on the debt agreement (mortgage, credit card application, or car loan) is the key to who will be responsible for the debt after the divorce. Even if a credit card was used for day-to-day family expenses, if it is only in one spouse’s name, that spouse will need to pay off the balance or get the debt discharged in bankruptcy.

However, where there are joint debts (where both spouses’ names appear on the debt agreement), your absolute judgment of divorce will need to be very clear about what will happen to those debts. If one spouse declares bankruptcy after divorce and discharges his or her liability on those debts, the creditors may try to collect the balance from the other spouse. Unless your absolute judgment of divorce includes protections against this, you may end up paying more than your fair share of the debt.

It may sound backwards, but if one spouse is planning on declaring bankruptcy, it may make sense for that spouse to assume as much of the debt as possible, so that it can be discharged by the bankruptcy court. However, once again, that strategy should be openly discussed with an experienced bankruptcy attorney before any judgment is entered to avoid unintended consequences.

Will Bankruptcy Affect Your Child Support?

No matter when the bankruptcy is filed, it will not affect your child support -- either the monthly payments or the accumulated debt for past missed payments. Child support is nondischargeable in bankruptcy, so the paying parent can’t avoid supporting his or her children just by filing for bankruptcy. Also, family support obligations are given top priority in the bankruptcy process. So the receiving parent will continue to receive support, even while other creditors get less than their full payments.

When money trouble is pushing you closer to divorce and bankruptcy, you need a lawyer who understands how the two will interact. At the Law Office of Shelly M. Ingram, our divorce lawyers will work with you and your bankruptcy attorney to plan the best approach for your family. If creditors come calling after the divorce is final, we can help you enforce your judgment to make sure you don’t pay more than your equitable share. Contact us today to schedule a consultation with an attorney.