The last few months of the year often stir up some serious emotional reflection if you’ve been considering a divorce. The holidays, the close of another year, should you, or shouldn’t you? And if you do, should you file before the end of the year, or does it really matter?
Filing for divorce during the fourth quarter of the year – October through December — can make sense for a variety of reasons. But it can also come with some unique challenges. The combination of holiday obligations, year-end financial deadlines and tax filings, and the sheer emotional weight of the season can cause people to make missteps that create unnecessary stress or financial hardship.
At Melone Hatley, P.C., we help clients weigh important considerations so they can make informed decisions. Here, we discuss common mistakes and help you consider some of the financial and legal implications of filing for divorce at the year-end, ensuring your strategy protects both your immediate needs and your long-term goals.
1. Not Considering Year-End Financial Implications
One of the biggest mistakes people who are divorcing make is failing to consider how the timing of their divorce can affect their finances.
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Remaining Married Through the End of the Year
IRS bases your marital status for tax purposes on what it is on December 31, meaning if you’re still legally married as of that date, you are considered married for the entire tax year. If you remain married through the end of the year, you can choose between filing jointly or “married filing separately.” While filing jointly usually affords a more favorable tax bracket and eligibility for certain credits, it also means you share the responsibility for any tax owed, even if your spouse’s income causes taxes to be due.
Filing separately can limit your individual liability but may reduce deductions and credits you could otherwise claim if you filed jointly. If you are filing separately, you must decide who claims these credits and deductions. This should be a strategic choice, so you don’t lose out on valuable tax savings.
Divorcing Before the End of the Year
If your divorce is finalized on or before December 31, you will have to file single or head of household for the tax year. Finalizing your divorce by year-end can simplify taxes without the need to coordinate deductions, credits, or shared liabilities, but it can also mean losing the benefits of joint filing for the tax year, and it usually shifts certain tax credits to one spouse exclusively.
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Child-Related Tax Concerns
Whether you divorce before or after December 31, you must still decide how you will claim your children as dependents unless you are filing jointly. In most cases, the parent who has the children for the majority of the year claims them, but custody agreements can allow for exceptions. Negotiating this early can not only avoid disputes but also prevent both parents from claiming the same child at tax time.
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Marital Property Considerations
Furthermore, divorcing at year-end can also bring other financial considerations into the process. For instance, in Virginia, if one spouse is due to receive a year-end bonus, commissions, stock options, or business income, these will be considered separate or marital property depending on when the separation or divorce occurred. If you and your spouse separate or divorce after receiving these assets, they will likely be considered part of the marital estate and subject to division.
Skipping a thorough financial review before filing can leave you at a disadvantage. You will want to consult with a financial advisor, a tax professional, or a family law attorney to help you identify the smartest timing for divorce, considering your financial situation.
2. Overlooking Health Insurance Changes
Health insurance is one of the most overlooked – and critical – concerns when deciding when to file for divorce. For many couples, one spouse carries the whole family’s health coverage through their employer. But once a divorce is finalized, the other spouse typically loses eligibility for that plan, triggering the need to find alternative coverage.
If you file for divorce toward the end of the year, you may find yourself scrambling to secure new insurance. While losing coverage outside of open enrollment usually qualifies you for a special enrollment period through the marketplace or allows you to continue coverage under COBRA, both options might be more expensive than you anticipate.
The timing of your divorce can also affect out-of-pocket medical expenses for the year. If you’ve already met your deductible on your current plan, switching to new coverage usually means starting over with a fresh deductible. Conversely, if you’re anticipating significant medical expenses in the new year, coordinating your divorce date with your insurance can offer savings.
Children’s coverage, in particular, needs careful attention. If one parent’s plan is significantly better or more affordable, this could influence negotiations over who will carry the children on their policy post-divorce. Without clear arrangements, you could risk lapses in coverage or double coverage.
3. Overlooking Holiday and Custody Scheduling
While the holidays are usually the most joyful time of the year for most families, when you’re in the middle of a separation or divorce, it can become a time of extraordinary stress. When holiday arrangements aren’t decided in advance, these conflicts can quickly turn tense, especially if both sides have long-lasting traditions they don’t want to give up.
If you are considering a divorce late in the year, addressing holiday custody ahead of time can help avoid disputes, hurt feelings between families, and confusion for the children. Without an agreed-upon schedule in place, children can feel torn between parents and even miss out on activities altogether. Planning ahead allows you to preserve important holiday traditions for your children and both families while reducing conflict. It also sets a cooperative tone for the rest of your divorce process.
4. Ignoring the Emotional and Mental Health Impact
With the pressure to keep up appearances for family and the natural stress of the season, it’s easy to underestimate the emotional impact filing for divorce can have during the final months of the year. But when you are under so much pressure, it’s also difficult to make good decisions. When you are emotionally and mentally overwhelmed, you may agree to terms just to “get it over with” or avoid important conversations to keep the peace, rather than clearly thinking through the implications.
Taking care of your emotional and mental health during a divorce isn’t just about feeling better. It’s about protecting your ability to make well-informed and rational choices. If you feel overwhelmed by the process on top of everything else in your life, you will want to seek support, whether that’s from trusted friends and family, a divorce support group, or a therapist. Don’t try to make these critical decisions on your own until you can do it with a clear mind.
5. Underestimating the Importance of Legal Guidance
Many people approach divorce with the idea that they will figure it out as they go, often making poor decisions during the early steps to save money. While this may seem practical at first, some decisions can be difficult or impossible to undo later. The reality is that the earliest stages of a divorce can have a lasting impact on everything that happens later.
Without legal guidance, you might unknowingly give up rights, agree to unfair terms, or make decisions that could weaken your position in negotiations. An experienced family law attorney will help you understand the implications of choices and create a strategy tailored to your goals and individual circumstances. Your attorney can also anticipate potential issues that you may not have considered.
At Melone Hatley, P.C., we are here to guide you through each step of the divorce process, helping you avoid costly mistakes in the beginning and throughout the process. If you are considering or are unsure about filing for divorce before the end of the year, schedule a free consultation with one of our Client Services Coordinators by calling us at (800) 479-8124.
Melone Hatley, P.C. is a woman-owned family law and estate planning firm proudly serving clients across Virginia, Florida, South Carolina, and Texas. We are committed to practicing law with both compassion and understanding – providing not just legal guidance but emotional support for families in transition. Our team takes a holistic approach to family law, working to protect the legal rights of clients while honoring the emotional realities behind their cases. Learn more at www.melonehatley.com.
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