CCDG Attorney Fried: Should You Get Divorced in 2021 Or Wait Until Next Year?

By Attorney Robert Fried

Once a decision is made to divorce, the first question I hear is, “How quickly can we get it done?” But once you get to November, the question should be whether it makes sense to divorce in 2021 or wait until January, 2022.

If you decide to divorce in 2021, who is going to take the tax deductions for the house? Or the tax dependency (child care credit for the children)? And there are new child-related tax advantages for children in 2021 than in 2020 — some of which may only apply to 2021. And oh, yes, I hear there is pending legislation which, if passed, may extend some of these into 2022.  And on top of that, if you are divorced on December 31 but had taxes withheld at the married rate, you are going to get an unpleasant surprise in April 2022 when you find out you owe thousands of dollars in additional taxes for the prior year.

Sound confusing? It absolutely is! Bottom line — there are numerous tax considerations that should be discussed before you decide which year to get divorced.

These are the discussions I am having with clients right now. At least two cases have decided to file taxes jointly in 2021 and get divorced in early January. But a key factor is what works best to minimize tax obligations. Make sure you are in a position to make an informed decision: Talk to your attorneys and financial professionals about the specific tax implications that can affect you!