There are important differences between an annulment and a divorce. Those differences matter when it comes to filing your taxes.
What is the difference between an annulment and a divorce?
A divorce ends a legally valid marriage, whereas as annulment determines the marriage never legally existed at all. An annulment is a legal determination that your marriage is void and did not legally exist. Annulments may only be granted for specific legal reasons. A divorce is a legal determination or order which dissolves a legally valid marriage and which divides property and assets that a former couple owned or shared.
When it comes to tax time, whether you received an annulment or a divorce will matter and have an impact on how you file taxes.
How will my divorce impact me at tax time?
When you divorce, when you file your taxes you will be required to file either as a single filer, head of household or "married filed jointly", depending on what stage your divorce is in at year end. Spousal support may have tax implications as well, which is why we always advise speaking with tax expert who can guide you on what to expect regarding your taxes following your divorce.
Property and asset divisions in a divorce may also be subject to income taxes, which can have a large impact on the tax liability of each party. A Certified Family Law Specialist such as Attorney Steven M. Bishop can advise you on the potential tax consequences of your proposed asset and property division.
How will my annulment impact me at tax time?
If you received an annulment from a family court in the previous year, that will be treated differently than a divorce when it comes to filing your taxes and what will be required. If your annulment was retroactive, then the IRS has determined that you and your former partner have (and had) no ground to file joint tax returns. So, if you were married in 2013, filed joint tax returns only to have your marriage annulled in 2015, you'll need to "undo" those filed returns and refile as individuals. You may then owe additional taxes, depending on what your withholdings, income and deductions were for the previous years.
The distinction between divorce and annulment is important when tax time rolls around. Whether you've been granted a divorce or an annulment, the tax code and rules are complex and can be difficult to follow. For more than 40 years Mr. Bishop has been providing outstanding services to his clients in San Diego and the greater southern California area and can help guide you through the process.