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Think about tax implications now instead of later

On Behalf of | Jun 16, 2014 | High Asset Divorce

Divorce can wreak havoc on your life in many different ways. One of the biggest fears divorced spouses have is in regards to their finances and how their future will be impacted. One thing many divorcing spouses struggle with is how divorce will affect their taxes. 

Are you recently divorced? If so, you could really benefit from learning about how your next tax filing may change. Several considerations should be made when filing your taxes for this year and even though tax season is a long ways away, it’s doesn’t hurt to learn about tax issues that may come up.

Alimony, children and property division can all impact your tax filing. In addition, you  should know if you will be filing your taxes as married, single or head of household next year. Your tax filing status depends on your marital status as of December 31 of the year you are filing taxes. If you were divorced before December 31, your tax filing status should be single. 

Some couples decide to file together, but it may not always make sense. You may also be able to claim head of household if you have lived apart from your ex for six months or longer and you pay more than 50 percent of the household expenses. Only one spouse can file as head of household.

Other issues to consider before filing taxes include: 

  • Alimony is considered taxable, meaning it will be considered income. It can also be deducted for those paying spousal support.
  • Only one spouse can claim children as dependents. Some parents switch off every year while others decide it’s in their best interests for the same parent to claim the kids.
  • Selling the family home could result in a higher tax bill depending on how much profit you make.

Even though taxes may be the last thing on your mind during and immediately after your divorce, thinking about the tax implications now can make life much easier next tax season. 

Source: The Huffington Post, “4 Things To Know After Filing Your Taxes After Divorce,” Lauren Young, June 10, 2014