Subscribe to this list via RSS Blog posts tagged in divorce and taxes

Posted on in Divorce

IL divorce lawyerMarriage is known to be one of the few opportunities to reduce your tax payments. Once married, spouses can file a joint tax return. This obviously changes once the divorce papers are signed and complete. Because your incomes are no longer considered tied, they cannot be filed together whether or not you have children together. For some couples, this makes little difference to them. While for others, the money from a tax return can help keep them afloat. Some couples go so far as staying separated to keep this financial benefit. This is typically not an idea that is suggested by an attorney since tax returns can be unpredictable. Couples that are in the divorce process but have not finalized it yet can still file their taxes together until the year that they are officially divorced. Most people do not consider the effect that divorce will have on their taxes until they have to file for their taxes for the first time post-divorce. Continue reading to learn about the different areas of your tax return that will need to be adjusted after your divorce papers get signed.

Areas of Adjustment

  1. Dependents: This is the area that is most familiar to those that do not work in the financial field. Any child is considered a dependent and must be claimed on tax returns. For those who are divorced, the custodial parent is the only one allowed to claim their child as their dependent. In other words, the parent that spends the most time caring for the child can legally claim the child on their taxes.

  2. Medical Expenses: This is similar to claiming a dependent. If you have a child that has extensive medical expenses, you can legally claim that on your taxes. This is only allowed for the parent who paid for the majority of the expenses, even those that are not considered the custodial parent. Just because you do not house the child does not mean you cannot claim some of their expenses.

  3. Alimony Payments: This is another term for spousal maintenance. If the law is requiring you to pay a significant amount of money to your ex-spouse to help support them, you can legally claim that in your taxes. In a way, this is the most similar alternative to filing jointly.

  4. Asset Shifts: Divorce settlements often result in properties being divided between the two former spouses. This means that these payments also transfer from one hand to the other. On the bright side, the recipient will not be required to pay taxes on the property’s transfer. However, if the recipient decides to sell the property, he/she will have to gains tax on all the appreciation before and after the transaction.

    ...

Posted on in Divorce

Illinois family law attorney, Illinois divorce lawyerDivorce can be overwhelming on its own, but adding the possible tax implications of divorce to the mix can definitely contribute to the stress of the process. You and your spouse have already decided to split. Your lifestyle, future, and any children you both share will be affected by the separation. Decisions must be made regarding filing the paperwork and how you will handle mediation or time in court. The last thing you are probably thinking about when you are ending your marriage is your taxes, but the reality is that your divorce does have the power to impact your taxes both during and after the transition.

Filing Status

The first factor you should be aware of is your filing status. For example, the “Head of Household” status typically provides a slight advantage to divorcing taxpayers, compared to the “Married Filing Single” or “Single” statuses, but certain requirements must be met to be considered head of the household, so you need to ensure you are in line with those requirements first.

When it comes to your status, the IRS determines which one you are eligible for based on where you stand come December 31st. If you are married on this date, the IRS considers you “married” for the entire year. The same idea applies if you are divorced on December 31st; if you are divorced on that specific day, then you are considered divorced for the whole year. What does all of this mean? In short, if you divorced by the 31st of December in any given year, then you are not eligible to file as a married person for that year’s taxes, and your filing status is an important factor in how much money you owe or receive when tax season arrives.

Claiming a Dependent

...

Recent Blog Posts

Categories

Archives

Contact Us

How Can We Help?

NOTE: Fields with a * indicate a required field.
*
*
*
AVVO LL BV