December 31st is an important day for separated couples. the IRS considers you married for the entire tax year when you have no separation maintenance decree by that day. If you are married by IRS standards, you can only choose "married filing jointly" or "married filing separately" when you prepare your taxes. You cannot file as "single" or "head or household".
Your filing status affects your tax rate and determines which credits you can claim. Filing jointly can result in a lower tax bill than filing separately, so you should have your tax preparer calculate your return both ways to determine which is best for you. Filing jointly does pose risks however. Both taxpayers share responsbility for any taxes due along with related penalties and interest. If one spouse skips out on his or her taxes, the other spouse is responsibile for paying them.
Filing separately generally leads to paying more taxes, but doing so avoids sharing liability for each other's tax obligation. When you file as "married filing separately" both taxpayers have to agree on taking the standard deduction or itemizing - if one itemizes, both must itemize, and both must have income to take this option. Some deductions are limited and both taxpayers lose the ability claim various credits such as the earned income credit and education tax credits.
If you do have a decree of separation prior to December 31st, you can file as "single" or "head of household". "Head of household" requires you to have a dependent and pay at least half of the expenses needed to maintain a home. If your dependent is a child who lives with you more than with your spouse, the IRS considers you to be the custodial parent. As the custodial parent, you can agree to let your spouse claim the child as a dependent by signing Form 8332. Allowing your spouse to claim the child as a dependent does not affect your ability to file as head of household or take advantage of tax breaks such as the work-related child care expense deduction.
No deductions are allowed for court costs and/or legal fees related to a divorce. However, if you itemize deductions you can deduct any portion of the fees that are related to tax advice and alimony, if you have an itemized billing statement from your attorney that clearly identifies charges for those services.
Consulting with a professional tax preparer as you work your way through a separation and/or divorce is always a wise move. Knowing what your options are ahead of time will prevent a nasty surprise come April 15th.