Divorce can be a stressful and complicated process, especially when it comes to dividing finances. Among the many financial considerations, tax overpayments and refunds can be a major point of contention between divorcing spouses. If you recently finalized a divorce in New York City and received a tax refund, you may be wondering: Who gets the money?
Understanding Tax Overpayments in New York Divorce
A tax overpayment occurs when you pay more in taxes throughout the year than what you actually owe. This often happens due to over-withholding from your paycheck, estimated tax payments, or tax deductions and credits that reduce your final tax liability. When this happens, the IRS or the New York State Department of Taxation issues a refund.
But if you and your former spouse filed jointly, the refund technically belongs to both of you. This can create disputes over who is entitled to what portion of the refund after a divorce.
Who Gets the Tax Refund After a Divorce in New York?
Determining who keeps the tax refund after a New York divorce is not always straightforward. Since tax refunds are based on income earned during the marriage, they’re often considered marital property—meaning both spouses may have a claim. However, multiple factors influence how the refund is handled.
How the Taxes Were Filed
If you and your former spouse filed jointly, the refund is typically considered marital property. This means it may be divided as part of the divorce settlement, even if one spouse earned the majority of the income. On the other hand, if you filed separately, the refund belongs solely to the taxpayer who filed the return. This can be an advantage for spouses who want to keep their finances independent post-divorce.
The Timing of the Overpayment
The timing of a tax overpayment in New York City can determine whether a refund is considered a joint or separate asset. If the overpayment happened before the divorce was finalized, the refund is usually treated as marital property, meaning both spouses may have a claim to it. However, if one spouse made estimated tax payments from their own income after separation, they may have a stronger argument that those payments should be classified as their separate property.
Courts may also consider whether the refund is based on deductions, credits, or withholdings that applied while both spouses were legally married, as these factors could further impact entitlement to the refund.
The Divorce Settlement Agreement
Some New York divorce settlements specifically address tax refunds and how they should be divided. If your divorce agreement includes terms about tax overpayments, those provisions will control how the refund is split.
However, if the agreement does not mention tax refunds, division of the refund may be left to court interpretation, which can lead to disputes. In such cases, a judge may consider factors such as financial contributions, tax liability, and the overall fairness of asset division.
Who Contributed More to the Overpayment?
In some cases, courts will evaluate which spouse contributed more to the tax overpayment when deciding how to divide the refund. If one spouse was the primary earner and contributed significantly more to tax payments, they may argue for a larger share of the refund. However, if one spouse was a stay-at-home parent or earned significantly less, they may claim an equal share based on New York’s equitable distribution laws.
Courts may also consider whether one spouse voluntarily made estimated tax payments or had more withheld from their paycheck, particularly if those contributions were disproportionate.
What If One Spouse Cashed the Refund Without Consent?
If your ex cashed the tax refund without sharing it, you have legal options. Since tax overpayments are often considered marital property in a New York City divorce, courts can require your former spouse to reimburse you for your share. If they refuse, you can file a motion to enforce your divorce settlement. If the refund was intentionally hidden or withheld, a judge may consider it financial misconduct, potentially adjusting other assets in your favor.
Protecting Your Tax Refund During and After Divorce
Disputes over tax overpayments and refunds can complicate a New York City divorce, but taking the right steps can help protect your share. Here’s how to safeguard your tax refund before, during, and after your divorce:
- File Separately Before Your Divorce Is Finalized: If you’re still legally married but going through a divorce, consider filing taxes separately instead of jointly. This ensures that any tax refund you receive belongs to you alone and isn’t subject to division. While filing separately may not always be the most tax-efficient option, it can help prevent conflicts over tax overpayments down the road.
- Include Tax Refund Terms in Your Divorce Agreement: Your New York City divorce settlement should clearly define how tax refunds and overpayments will be handled. Specify whether the refund will be split equally, allocated based on earnings, or assigned to one spouse to prevent future disputes and ensure both parties understand their financial rights.
- Use Form 8379 (Injured Spouse Allocation) If Necessary: If your ex-spouse has debts—such as past-due child support, student loans, or unpaid taxes—the IRS may apply your tax refund to cover those obligations. If you don’t want your share of the refund to be used for your ex’s debts, you can file Form 8379 (Injured Spouse Allocation). This form allows you to reclaim your portion of the refund rather than losing it to their financial obligations.
- Consult a New York City Divorce Attorney: A New York City divorce attorney can help you negotiate a fair settlement, ensure your refund is properly allocated, and protect your financial interests. If you believe your ex unfairly claimed a tax refund that belongs to you, legal guidance is essential to recovering your rightful share.
Taking proactive steps to handle tax overpayments and refunds can help you avoid unnecessary financial stress after a New York divorce. If you need assistance, consulting an experienced divorce attorney can give you the clarity and support you need.
How Our Team Can Help
At Brian D. Perskin & Associates, we understand that financial disputes—especially those involving tax overpayments and refunds in a New York divorce—can be stressful and complicated. Our experienced attorneys in Brooklyn and Manhattan are here to help you protect your financial interests and ensure you receive your fair share.
Don’t leave your tax refund up to chance. Whether you need help negotiating a fair division, enforcing your rights, or taking legal action, our team is ready to guide you every step of the way. Contact Brian D. Perskin & Associates today for a consultation and take control of your financial future.