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Are you Thinking about Filing for Divorce? If so, Time is Running Out Before The End of Year and There are Tax Consequences in 2018

On Behalf of | Aug 12, 2018 | Firm News

Under Indiana law there is what is commonly known as a mandatory waiting period after the filing before a divorce can be final. (The legal term is dissolution of marriage but for this article the term divorce is used). Pursuant to I.C. 31-15-2-10, “in an action for a dissolution of marriage … a final hearing shall be conducted not earlier than sixty (60) days after the filing of the petition.”
The last court day of this year is December 28, 2018. Also due to Christmas and New Year’s Day falling on Tuesdays, most courts are closed the Monday before which will result in the court only being open maybe 2-3 days the last week of the year. During the holidays, courts are addressing emergencies and other matters, so a non-contested divorce may be pushed aside until after the beginning of the year. Therefore, your last reasonable date to file for divorce and this means file with the court is October 22, 2018, even then you are taking a chance your divorce will not be finalized. Many people think the 60 days starts when you see a lawyer to start your divorce, it does not. This assumes you will have an agreed divorce. Otherwise, depending upon the issues and the court involved, it may be too late to file the divorce and have it finalized before the end of the year.
While Indiana law allows bifurcation of the divorce versus the other issues, see IC 31-15-2-14, most courts will not grant a bifurcated divorce without agreement of the parties, and many courts will not grant a bifurcated divorce at all, especially if children are involved. Further, your spouse may not agree as a matter of strategy especially if you are the higher income earner.
Now you might ask, what does it matter?
In 2017 the Congress changed the tax laws which can have significant financial impact on your lives. A summary of the laws can be found at here A review of this publication reveals that the IRS has not addressed many of the changes put into effect by the new law.

The Child Tax Credit, not to be confused with the Child Care Credit has changed. Tax exemptions have changed, and the IRS has not clarified how they will be handled for parents who are no longer together. You should consult a Certified Public Accountant (CPA) to verify your situation.
If your divorce is final by December 31 (remember courts are closed on or after December 28), will you be in a higher or lower tax bracket? If you are not divorced by December 31 (remember courts are closed on or after December 28), how will the refund or tax liability be handled? Who gets the exemptions (actually the child tax credit of up to $2000 per child) for any children and will you qualify for head of household? Who will receive the mortgage deduction? If you have not resided in the home recently enough are you going to be taxed on any sale? These decisions could mean thousands of dollars difference in your tax liability and should be given consideration. The IRS has not published the schedules for 2018; however, to obtain an idea of the affect upon you check out IRS interactive tool.. A new app that is handy for a quick reference guide can be found at the Columbus Life Insurance Company Tax Guide for 2018.
Prepared by Richard A. Mann of Mann Law, P.C. Attorneys at Law,
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