CCDG Attorney Fried: Should You Get Divorced in 2020 Or Wait for 2021?

By Robert B. Fried

In negotiated divorces, whether mediation or collaborative divorce, you can still make the decision as to which year you get divorced. But before you do, there are a number of tax-related issues to consider.

First, if you are thinking of a divorce in 2020, will the family unit (whether together or separate filings) pay more in taxes by filing joint by filing, married-separate. And if married-filing-separate, who takes the tax dependency (child care credit) for the children? Who takes the mortgage interest and real estate tax credit?

On the other hand, if you have been negotiating your divorce and are close to conclusion, does it makes economic sense to get divorced by December 31 OR do you wait and get divorced in January  2021?

By the way, if you are single on December 31 but had your employer withhold taxes if you were married all year, the IRS treats you as single for the entire year, and you may face a large tax obligation come April.

I have three cases ready to go to final judgment. Two have chosen to get divorced this year. The third will be divorced in January – all three based their decisions on minimizing tax obligations. If your divorce is ready to go, make sure you discuss the tax implications with your attorneys and financial professionals.