What are the implications if my legally separated wife and I reconcile?
Full Question:
Answer:
In North Carolina, Reconciliation is the resumption of marital relations and voluntary renewal as husband and wife, which is judged by the totality of the circumstances. In the event that two spouses engage in isolated incidents of sexual intercourse, a court will not consider this to be a marital resumption that arises to the level of reconciliation. Yet, it has been held in North Carolina case law that if two separated spouses are holding themselves out to the public as husband and wife, even without sexual intercourse, reconciliation may occur.
In the event that two individuals do reconcile, the North Carolina statutory one year period of separation for a divorce will restart. Additionally, depending on the language placed in a Separation Agreement, reconciliation may have the ability to void a Separation Agreement in part or whole.
Furthermore, it is important to note that reconciliation will change the date of separation, which may have a dramatic effect on the value of an estate, especially with the current volatility of some retirement accounts that are held in stock portfolios.
If reconciliation has occurred, review the terms of your separation agreement to see if it would be voided in part or in its entirety.
Your tax filing status depends on your marital status on the last day of the tax year. If you are unmarried, your filing status is single or head of household. If you are married, your filing status is either married filing a joint return or married filing a separate return.
According to the IRS, you are considered married for the whole year if on the last day of your tax year you and your spouse meet any one of the following tests:
You are married and living together as husband and wife.
You are living together in a common law marriage that is recognized in the state where you now live or in the state where the common law marriage began.
You are married and living apart, but not legally separated under a decree of divorce or separate maintenance.
You are separated under an interlocutory (not final) decree of divorce. For purposes of filing a joint return, you are not considered divorced.
It would be recommended that you explore the issue with your local tax professional.
