There are a variety of issues that may lead a couple to divorce. During divorce proceedings, it is not always easy for couples to remain amicable or cooperative. Living in a community property state and understanding the tax implications of that status may make it necessary for divorcing California couples to set aside their differences and focus on their finances.
Financial paperwork can be complex at the best of times and may require specific advice or guidance depending on its nature. Until divorces are finalized, married couples generally continue to file joint tax returns. However, there may be instances in which it is necessary to file separately. Even when filing separately, couples will still need to discuss their finances in order to file their taxes correctly.
Determining which assets are community property may become a contentious issue. Assets purchased by spouses during their time together, using funds from an account held in joint names, would usually be considered community property. Assets or property inherited during a marriage may be considered personal property if they were bequeathed to one spouse only.
Expenses and deductions may also fall into either category, so clarity is necessary in order to ensure that everything is in order. Appropriate advice regarding assets and income may assist California spouses in completing what they may hope is their final return as a married couple. The tax implications of a community property state may be complex, but cooperation on both sides will smooth the process and allow both parties to move forward into a new fiscal year.
Source: montereyherald.com, “Barry Dolowich, Tax Tips: Filing separately in a community property state“, Barry Dolowich, Feb. 24, 2015
