Divorce And Taxes: What You Need To Know
A divorce is a huge change for a person, especially if they had been married for a long time. There are many aspects to a divorce, such as asset division, child custody, child support and alimony.
Even when your divorce has been officially finalized, there’s still one thing to think about: taxes. Taxes are one of the certainties of life, and they certainly don’t go away after a divorce. On the contrary, this can make your taxes even more complicated than before.
Have you recently been divorced? If so, you’ll want to know how to file your taxes by the April 17 deadline.
First things first: you need to know your filing status. If you received your final divorce decree by December 31, then you and your spouse will need to file separately. If you are still working out the details of your divorce, then you can file as married filing separately or you can opt to file jointly as a married couple.
Using Children as Exemptions
Both parents may try to claim their children as exemptions, but only the custodial parent can do so. The only way the other parent can claim the child is if this is outlined in the divorce decree. The parent who claims the exemption can also claim the child and higher education credits.
Child Support and Alimony
Both child support and alimony are payments made to an ex-spouse, but that’s where the similarities end. Child support payments you make are not tax deductible but alimony payments are. Also, child support is not treated as income for the recipient, but alimony is for the spouse who receives it.
Taxation of Assets
This is one of the most complicated aspects of a divorce. Hopefully you took care of the tax burden during the divorce, such as selling the marital home, if applicable. However, if you got the house in the divorce, you will likely face capital gains taxes down the line when you decide to sell the home. If you are wondering whether or not you should keep the home in the divorce, keep this in mind.
Consider Increasing Your Withholding
Once you divorce, you lose out on the various tax benefits that married couples receive. Therefore, you may need to have more money taken out to avoid a hefty tax bill. Plus, if you receive alimony, it will be counted as income, increasing your tax liability even more.
Get Help for Your Divorce
The effects of divorce tend to linger, even after the final decree has been issued. Now that tax season is here, you need to know what to do to make sure you do your taxes the right way. Otherwise, you could end up with an unexpected bill later on.
The Dade City family law attorneys at Mander Law Group can help you with all the aspects of your divorce. Get the help you need to deal with all the important issues you’ll face during and after a divorce. To schedule a consultation, contact us at (800) 557-0411 today.