Filing taxes while separated but not divorced in North Carolina can seem complex, especially during an already stressful time.
The way you file your taxes affects your refund, your eligibility for credits, and your overall financial situation. Understanding your options and legal obligations is essential to avoid costly mistakes in your future and record.
At Martine Law, we help clients with life transitions like separation and divorce while keeping them accountable for their obligations. Today, we’ll break down the essentials of filing taxes while separated but not divorced in North Carolina.
Understanding Your Marital Status for Tax Purposes
Even if you are living apart from your spouse, the IRS still considers you legally married until your divorce is finalized. This means that your tax filing status is not based on whether you share a home but on your legal marital status as of December 31st of the tax year.
In North Carolina, separation does not change your marital status. Couples who are separated but not legally divorced must choose one of the following filing statuses:
- Married Filing Jointly (MFJ)
- Married Filing Separately (MFS)
- Head of Household (HOH) (only in certain situations)
Understanding these options helps you avoid penalties and select the filing status that benefits your finances.
Filing Status Options
1. Married Filing Jointly (MFJ)
This is often the most beneficial filing status because it allows couples to take advantage of larger tax deductions, higher income thresholds for tax brackets, and various tax credits.
- Pros: Higher deductions, better tax rates, eligibility for many credits.
- Cons: Both spouses are jointly responsible for any taxes owed or errors in the return.
You may want to avoid filing jointly if there are concerns about your spouse’s financial habits, hidden income, or outstanding tax debt.
2. Married Filing Separately (MFS)
This filing status is less advantageous in most cases, but it can be a good option if you want to clearly separate your finances from your spouse.
- Pros: You’re only responsible for your own tax liability.
- Cons: You lose access to many tax credits and may pay a higher overall tax rate.
3. Head of Household (HOH)
This option is only available if you have lived separately from your spouse for the last six months of the tax year, paid more than half of the household expenses, and have a qualifying dependent.
- Pros: Better tax rates than MFS, access to credits.
- Cons: Strict eligibility requirements.
For full IRS guidelines, visit irs.gov.
Separation Agreements and Taxes
If you and your spouse have a separation agreement, it may outline financial responsibilities, including who can claim certain deductions or dependents. However, the IRS rules ultimately control tax filing status and deductions.
A separation agreement cannot override tax law but can help avoid disputes. Always keep a signed copy of the agreement for your records, and consult a tax attorney or CPA if you have questions.
Claiming Dependents
If you and your spouse have children, deciding who claims them as dependents is crucial. The IRS generally awards this deduction to the custodial parent—the parent the child spends more nights with during the tax year.
However, parents can agree to alternate years or assign the deduction using IRS Form 8332. This decision is best made in writing to avoid future conflicts.
Handling Property and Alimony
Property Division
North Carolina is an equitable distribution state, meaning marital property is divided fairly (not necessarily equally) during divorce proceedings. Until the divorce is finalized, your tax obligations on jointly owned assets remain shared.
Alimony
For divorces finalized after 2018, alimony is no longer deductible for the payer or taxable income for the recipient. If you’re separated but not divorced, consult a tax professional about temporary spousal support and how it impacts your taxes.
Common Mistakes to Avoid
Trying to navigate the complex tax and legal North Carolina system can be confusing, and mistakes often arise.
- Filing the wrong status – Filing as single when still legally married is a common error.
- Ignoring your spouse’s financial situation – If you file jointly, you share responsibility for any tax issues.
- Failing to document support payments – Keep detailed records for all child or spousal support.
- Skipping professional advice – A tax professional or attorney can save you money in the long run.
You don’t need to do it alone. At Martine Law we are here to help you make the right decisions for your situation. Call today.
How Martine Law Can Help
Separation and divorce involve complicated tax implications that can impact your financial future. At Martine Law, we:
- Provide clear legal guidance during your separation,
- Help you understand your tax filing options,
- Work with financial professionals to protect your assets, and
- Assist in creating separation agreements that minimize tax complications.
We are local North Carolina family law attorneys who understand both state laws and IRS regulations. We work closely with you to make sure your rights are protected and your financial future is secure.
Prepare For Your Consult
Not sure what to bring or how to ask for help? We are ready to guide you to a path that work for you.
Official Resources
For more information about separation, divorce, or custody in North Carolina, visit Martine Law.