Figured I would come to my best source of advice to toss out this question/scenario.
After 6 years of marriage and two kids, my "soon-to-be" ex-wife decided she wanted to be free and feel independent. Long story short, she cheated on me and moved out of the family home. Both kids stay with me 100% of the time as she rents a room and can't have them spend the night with her. She has agreed to give me full physical custody and pay the appropriate child support. Trouble is, we moved to a new state recently and need to establish residency before we can file the divorce paperwork.
Now that tax time has come around, I told her that I was going to file as Head of Household and exclude her income seeing as the kids are always with me and she has not lived in the family home since April 2012. On the up side for me, the larger standard deduction combined with a single income results in a pretty substantial federal refund for me. However, she will likely end up owing on her taxes because she negligently miscalculated her withholding for 2012. Therefore, she has proposed that we continue to file as married-joint until the divorce is finalized and split the refund.
The way I see it, I have a couple of options and the respective refunds:
1. Be smart. File HoH and take the refund to support the kids. ($7,500)
2. Be nice. File HoH and give her some of the money to help her out. ($7,500 - what I give her)
3. Be stupid. File married-joint and split the refund with her as she suggests. ($5,200 / 2)
There are, of course, variations on each option such as letting her claim one child, but I do not want to set a precedent for the future. I also feel like it was on her to manage her withholding (especially considering she decided she wanted to be independent - which, by the way, is still her only rationalization for her actions).
So... I guess I don't really have a concrete question. But any input would be much appreciated. Thanks in advance.
After 6 years of marriage and two kids, my "soon-to-be" ex-wife decided she wanted to be free and feel independent. Long story short, she cheated on me and moved out of the family home. Both kids stay with me 100% of the time as she rents a room and can't have them spend the night with her. She has agreed to give me full physical custody and pay the appropriate child support. Trouble is, we moved to a new state recently and need to establish residency before we can file the divorce paperwork.
Now that tax time has come around, I told her that I was going to file as Head of Household and exclude her income seeing as the kids are always with me and she has not lived in the family home since April 2012. On the up side for me, the larger standard deduction combined with a single income results in a pretty substantial federal refund for me. However, she will likely end up owing on her taxes because she negligently miscalculated her withholding for 2012. Therefore, she has proposed that we continue to file as married-joint until the divorce is finalized and split the refund.
The way I see it, I have a couple of options and the respective refunds:
1. Be smart. File HoH and take the refund to support the kids. ($7,500)
2. Be nice. File HoH and give her some of the money to help her out. ($7,500 - what I give her)
3. Be stupid. File married-joint and split the refund with her as she suggests. ($5,200 / 2)
There are, of course, variations on each option such as letting her claim one child, but I do not want to set a precedent for the future. I also feel like it was on her to manage her withholding (especially considering she decided she wanted to be independent - which, by the way, is still her only rationalization for her actions).
So... I guess I don't really have a concrete question. But any input would be much appreciated. Thanks in advance.