Married couple with joint investment accounts, officially separted in 2018. How should I proceed?

This couple has actually been physically living apart for a number of years. I filed their 2016 and 2017 tax returns (Turbo Tax) as a married couple,but living apart.

There was and still are joint investment and banking accounts. In both of the prior years, I also split pension income.

They are now "offically" separated and have intiated divorce proceedings. The clients understand that income from the joint accounts will need to be reported as in previous years but no longer want any pension splitting to take place.

Is there anything I should do prior to rolling the file forward into Profile? When should the files be "uncoupled"?

Answer

Nothing specific to do here. I would roll the files into profile for 2017 and just uncouple them after carrying their 2017 returns forward to 2018. Then just add the separation date on each return. If they have already been living apart for several years, you will basically just have to make up an "official" separation date. 

Joint investments should continue to be taxed as normal (based on the % invested by each spouse, 50/50, 60/40 etc.). 

Was this answer helpful? Yes No

No answers have been posted

More Actions

People come to ProFile for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.

Select a file to attach: