We assume you are reading this before you divorce. Perhaps the best way to prepare yourself would be to read IRS publication 505 "Divorced or Separated Individuals". Determine with your tax advisor which tax filing status will be in your personal best interest, and drive your negotiations in that direction.

The very best way to do that is to estimate with your spouse the tax ramifications of filing "married -- filing jointly" or "married-filing separately." Your federal income tax filing status is determined by your marital status on the last day of the tax yea. This will require some calculations that either you can do, or you can ask a tax advisor to do. Here's how it shakes out:

Your filing status "options" will be:

• If you're still legally married, you can filed a "married filing jointly" return (the most advantageous filing status for most people)
• If you're legally divorced, you'll file as "single" or "head of household"
• You can file as "head of household" (a better filing status than "single") if:

-You and your ex-spouse haven't lived together during the past   six months,
-Your home was the main home for your qualifying dependents   (usually your children)
-You paid more than half the cost of keeping up your home for   at least half the year
-You can claim the exemption for your qualifying dependent

The IRS presumes that the custodial parent is entitled to the exemption for children. The custodial parent may, however, "trade" the exemption to the non custodial parent using IRS Form 8332. You may wish to negotiate this exemption with your spouse.

Child care credits on your tax filing form are only available to the custodial parent. Child support payments are neither tax deductible nor taxable to the person receiving the money. Alimony is tax deductible to the sender and taxable income to the recipient.

A QDRO (Qualified Domestic Relations Order) may be necessary in order to divide assets in a tax-sheltered retirement account. QDRO's are court orders.

Some costs associated with the cost of tax advice given you by appraisers, actuaries and accountants can be tax deductible. Ask your advisor.

If you are the custodial parent and paying a child's college expenses, you may be eligible for the Hope Scholarship Credit and Lifetime Learning Credit on your taxes. If you have 'traded' or are alternating taking child exemptions, you may take the Hope Scholarship Credit and Lifetime Learning Credit in years where you claim the child as an exemption on your taxes.

Pay particularly close attention to marital assets that have a low cost basis, as that cost basis gets inherited by the person who receives the asset in the divorce settlement. One does not want to be stuck solely with highly appreciated assets if any of them might be sold in the near future. Consider the after-tax value of these assets.

Speak with your tax advisor early on in the divorce process. You may want to adjust your withholding in anticipation of a changed tax status later in the year.

Be aware that if your divorce is finalized on or before December 31 of a year, then, according to the IRS, you are considered unmarried for the entire year. This is a fact you may want to consider when planning the timing of your divorce.

You and your spouse can continue to file joint tax returns even after you are separated and have filed for divorce. However, if you signed a joint tax return that is fraudulent you are liable for the money owed unless you can show you were an "innocent spouse."