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My husband and I are divorcing. It is late in the year, now

My husband and I are...
My husband and I are divorcing. It is late in the year, now (2013), and there is a possibility of us wrapping it up by the end of this year. I am thinking then 2013 would be our last year of married/filing jointly. Would it be more advantageous to file married/filing jointly for 2013 or wait and finalize after the first of the year (2014). Just trying to minimize our final tax bill.
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Answered in 2 minutes by:
10/22/2013
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 12,878
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Lane :

Hi,

Lane :

Yes, don't know all of your specifics, but married filing jointly almost always comes out better, because of the higher tax bracket levels (higher income taxed at lower rates) and the higher standard deduction

Lane :

See this:

Lane :












































For a single filer



Tax rate



C.Gain rate



taxable income from $0 to $8,925,



10%



0%



taxable income over $8,925 to $36,250



15%



0%



taxable income over $36,250 to $87,850



25%



15%



on taxable income over $87,850 to $183,250



28%



15%



on taxable income over $183,250 to $398,350



33%



15%



on taxable income over $398,350 to $400,000



35%



15%



on taxable income over $400,000



39.6%



20%


Lane :

Versus this:

Lane :












































For a Married filing jointly filer



Tax rate



C.Gain rate



on taxable income from $0 to $17,850



10%



0%



on taxable income over $17,850 to $72,500



15%



0%



on taxable income over $72,500 to $146,400



25%



15%



on taxable income over $146,400 to $223,050



28%



15%



on taxable income over $223,050 to $398,350



33%



15%



on taxable income over $398,350 to $450,000



35%



15%



on taxable income over $450,000



39.6%



20%


Lane :

HOWEVER, the answer COULD change, if tere is a wide disparity in income between the two of you

Lane :

Your instincts are good, especially if the time frame changes nothing else, effectively (When you finalize, I mean)

Lane :

Make sense?

Lane :

We started at about 1:49 and it's now 2:02 ... I wonder if we're having systems problems ... I'm still not seeing you come into the chat

Lane :

I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)

Lane :

But please .... Comeback there and ask any follow-up questions you may have ... I'll be here

Lane :

Please let me know if you have any questions at all ...


Lane

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Hi Melissa!

I THINK we may have worked together before?

Either way, ... just checking back HERE, as I never saw you come into the chat.

Let me know if yo have any questions at all

Lane
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Hi Melissa, in looking back at the answer, it appears that the system put a huge amount of white space between the two different sets of tax brackets (Single and Married Filing Jointly.

I'm pasting them here, so that you'll more easily see the different between the two:


For a Married filing jointly filer

Tax rate

C.Gain rate

on taxable income from $0 to $17,850

10%

0%

on taxable income over $17,850 to $72,500

15%

0%

on taxable income over $72,500 to $146,400

25%

15%

on taxable income over $146,400 to $223,050

28%

15%

on taxable income over $223,050 to $398,350

33%

15%

on taxable income over $398,350 to $450,000

35%

15%

on taxable income over $450,000

39.6%

20%



For a single filer

Tax rate

C.Gain rate

taxable income from $0 to $8,925,

10%

0%

taxable income over $8,925 to $36,250

15%

0%

taxable income over $36,250 to $87,850

25%

15%

on taxable income over $87,850 to $183,250

28%

15%

on taxable income over $183,250 to $398,350

33%

15%

on taxable income over $398,350 to $400,000

35%

15%

on taxable income over $400,000

39.6%

20%



Hope this helps

Lane

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.

HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

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Customer reply replied 4 years ago


I see you are still online, but can't figure out how to 'chat' with you!


 


M


Hi Melissa ... sorry, I just broke out of a meeting.

Now that we're in Q&A, we'll have to go back and forth this way IF we stay on this question.

What you can do if you want to chat is just let this one time out (don't rate on this one), then just ask a new question.

BUT be sure to put "For Lane only, at the beginning

OR we can go back and forth this way ... Either way works... I'll be here the rest of the evening

Lane
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Customer reply replied 4 years ago


I tried to ask a new question under your name, but it wanted to charge me a second time. Maybe there was something I didn't understand how to do.


Sorry, It shouldn't ... but again we see nothing of what you do there.

I just know that WE don't see our half until (and if) there's a positive rating.

Was there something else on this? I can do some projections if you like...

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Customer reply replied 4 years ago


Maybe you didn't get my follow up question...then. I am not sure the percentages are making any sense to me. It seems like you are saying it would be more advantageous for us to finish 2013 together-file jointly, and finalize the divorce in January 2014? I was hoping for a ballpark number to understand the difference between 2013 and 2014.


 


Sam's salary is $250,000/year. I will be getting $85K/year alimony. I know these are only basic figures....but is there any way to tell the tax advantage...filing for divorce in 2013 or 2014?

Sorry .. did not. The tax brackets above simply show that for those filing jointly, the income taxes are less:

For example, for married filers, income over $72,500 to $146,400 is taxed at 25%.

But for a single filer the 25% bracket kicks in at a much lower income level ... taxable income over $36,250 to $87,850.



So, if you file in 2014 (and hence, are able to file jointly for 2013 it will look like this)

Estimated Tax Analysis

Gross income $250,000
Qualified plan contributions-$0
Adjusted gross income=$250,000
Standard/Itemized deductions-$12,200
Personal exemptions-$7,800
Taxable income=$230,000
Tax liability before credits $52,213
Child tax credits-$0
Estimated tax liability=$52,213

A total of 52000 in taxes between the two of you.

Now to look at it the other way, I'll have to assume that Sam still has a 250,000 salary (and assuming that you "wrap up late" in the year as you said...I won't show any income for you ALIMONY or offsetting deduction FROM that alimony for him) .. so now it looks like this

Estimated Tax Analysis

Gross income $250,000
Qualified plan contributions-$0
Adjusted gross income=$250,000
Standard/Itemized deductions-$6,100
Personal exemptions-$3,900
Taxable income=$240,000
Tax liability before credits $63,331
Child tax credits-$0
Estimated tax liability=$63,331

Again that assumes, all other things being equal ... no income for you and he still has his salary but files as single because that's the status at the end of the year.

 

If there is say a month of alimony, then 7083 would be your income ... not enough to have to file and HIS taxes would still be over 60,000.

 

 

Does that help?

 

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Hi Melissa ... just wanted to be sure that last part made sense.

If you are married on the last day of the year, then you have two options; Married filing jointly and Married filing separately (MUCH better to file jointly, ... for SEVERAL reasons).

If you are not married and there are no dependents, then you both must file s single.

So, as long as the tax refund is shared equally, (in the married filing jointly for 2013 scenario) Then you're much better to wait until after the first of the year to wrap things up.

Now, what each of your respective tax situations looks like for the NEXT year (2014) is a different issue, and will depend on when the alimony actually starts. Essentially they will be deductible for him and taxable to you.




Hope this has helped you think through it.

Lane

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.

HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 12,878
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Finance Specialists are ready to help you
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Customer reply replied 4 years ago


Thanks Lane.....I see what you are saying. There is a reason I am NOT an accountant! Ha ha!


 


I appreciate your help with this and I think we will probably wait till January to file.


 


Best,


Melissa


I would agree ... on waiting (for THIS purpose).

Thanks so much for the rating!

If you'd like to work with ME again just say "For Lane only," at the beginning of your next question


OR set me up as your preferred expert on your home page.


Regardless, thanks again,

Lane

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 12,878
12,878 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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