Massachusetts divorce lawyer Jason V. Owens reviews how the “90-day Nisi Period” following a Massachusetts divorce affects state and federal tax filing status.
The answer to this question should be simple: the IRS will tell you that if you and your former spouse were still married on December 31st of the previous tax year, then your tax filing status is married, which limits you to filing either “married filing jointly” or “married filing singly” for that tax year. (Notably, “married filing jointly” provides a superior tax rate to that of a single person filing individually, while “married filing singly” provides an inferior tax rate to a single person filing individually. In other words, filing “married filing jointly” is the worst tax rate to file under.)
In Massachusetts, however, this question is far more complicated because of the state’s use of the antiquated “90-Day Nisi period”, which requires divorced parties to wait 90 or 120 days for their divorce to become “absolute” after their separation agreement has been approved by the judge. The terms can be confusing here. In Massachusetts, the day that the judge approves the separation agreement is called the Judgment of Divorce Nisi. Upon the entry of Judgment of Divorce Nisi, all rights and obligations set forth in the separation agreement (child support, custody, division of assets, etc.) become immediately enforceable. In almost every meaningful way, the parties are divorced on the date that Judgment of Divorce Nisi enters.
Typically, the one and only issue that is affected by the 90-day “Nisi period” is marital status. Thus, if Judgment of Divorce Nisi enters on December 1, 2016, then all parts of the the separation agreement are effective and enforceable on December 1, 2016, and the parties will be effectively divorced, except for one, small thing: the parties’ marital status will not technically change to “divorced” for another 90 days. (Notably, the parties do not need to do anything for the divorce to become “absolute”. It happens automatically after 90 days.)
Returning to the example above, of parties who were divorced on 12/1/2016: these people must eventually face an awkward question. Despite being divorced in all meaningful ways before the New Year, they will remain married for tax purposes for 2016. Do they:
- Share financial documents and cooperate to file joint tax returns with their former spouse?
- File “married filing separately” and accept the worst available tax rate for 2016?
- File “single” despite technically having a marital status of “married” until March 2017 due to the 90-day Nisi period?
This is addressed directly by the Massachusetts Department of Revenue (DOR) in Directive 89-3: Filing Status; Divorced, which states that our hypothetical parties continue to be “married” for tax purposes for the entire 90-day Nisi Period. Moreover, where marital status is purely a function of state law, the Internal Revenue Status will follow DOR’s position, meaning that federal tax filing status is also “married” for our hypothetical divorced spouses.
In practical terms, it is unclear how zealously DOR or the IRS monitor the Nisi period for Massachusetts residents filing taxes after a divorce. If one spouse files “married filing separately” – and lists the SSN of his or her former spouse – this could certainly create a red flag the other party filed individually for the same year. Conversely, if DOR or the IRS initiates an audit, the question may be asked: when exactly did you get divorced?
What is clear is that the letter of the law requires parties whose marital status remained “married” on December 31st of a given tax year to file as “married” for that tax year.
About the Author: Jason V. Owens is a Massachusetts divorce lawyer and Massachusetts family law attorney for Lynch & Owens, located in Hingham, Massachusetts.
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