What do New Yorkers want for the New Year? A divorce.
While January can be high in divorces because many couples wait until after the holidays to split, many married couples in the Big Apple do it in December. Who cares about the holiday? They are rushing to finalize their pending divorce cases so they can file as “single” for all of 2017, getting them tax savings. If you finalize on Dec. 31, you are able to do this, so lawyers find themselves busy during the season finalizing splits.
“As of December 31 each year, and it’s matter of federal law, has different rates depending on what your tax filing status is: single, married filing jointly, married filing separate,” explains Christopher Melcher, founding partner of top family law firm, Walzer Melcher LLP.
“Your status is determined as of December 31in New York, so New Year’s Eve will determine what your tax filing status is.”
The divorce proceedings have to already been in place, it’s not like you can complete the entire divorce process on New Year’s Eve. But if you have filed, you can get a judge to terminate the marriage before the New Year, saving you some money.
“That’s what creates the rush,” Christopher says. “If you are still legally married on New Year’s Eve, you have to file jointly with your spouse and many people don’t want to do that for various reasons. This rush is people who previously filed-people rushing to court to have their marital status terminated by the New Year.”
Christopher explains that it’s mostly wealthy people who take advantage of this rule.
“You can save a lot of money, but we’re talking about people who are wealthy - where this incremental difference in tax rates makes a big difference in dollars,” he says. “People who pay significant taxes, they will benefit by having a lower tax rate more than others.”
Filing rules are different in California, he adds, because there is a waiting period in the state.
“You have to wait six months from day you started divorce proceedings in California. They have to have started the case prior to June 30 so they can get divorced on New Year’s Eve.”
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