Many things change during and after a divorce. Your living situation, how often you see your children, and your finances are just a few of the things that adjust in your life due to a divorce. One thing that many do not think about until they are working through it, though, is how filing taxes will change as a result of a divorce.
It is understandable how the subject of taxes is usually on the lower end of priorities during a divorce since there can be so much involved during the divorce process. Taxes are important, though, and if you are not on top of them, they can be a headache during tax season. Moreover, the terms included in your divorce agreement may affect your tax return. Below are a few of the tax-related items you need to be aware of before your divorce is final, so you are prepared when filing your taxes:
- Filing Status – When you are in the middle of your divorce, talk with your soon to be former spouse regarding the fact that your filing status will change once a divorce decree has been entered. If there are reasons why you both want to file jointly, then you will need to wait until the beginning part of the year to make your divorce final since, on your tax return, you will need to use your status as of December 31 of the tax year being filed.
- Inventory of Assets – It is wise to gather as much information about your assets as you can during your divorce. You will need to determine whose name is on the account and be able to take inventory of your assets and liabilities. This will make your life easier when you are filing your taxes, and you will avoid going through the stress of this process again.
- Claiming Dependents – When children are involved in a divorce and the subject of child custody comes up, one item to ask is who will be able to claim the children as dependents on their tax return. Usually, the parent with the greater number of overnights will be eligible to claim the children as dependents. However, ensure this is clear while you are working out the details of your divorce.
- Alimony & Child Support – Before your divorce is final, you need to know how alimony and child support are handled. Due to the changes in the tax law, neither is taxable to the recipient or tax deductible to the payor.
- Tax Refund – If you and your soon to be former spouse decide to finalize your divorce at a time that allows you to file for your taxes jointly that year, and you anticipate receiving a refund, you need to make sure it is clear who will receive the tax return or how you will split it.
While you are going through a divorce, do not let the subject of taxes slip your mind and how your divorce will impact them. If you can stay on top of the tax changes from divorce before your divorce is final, then you will be in great shape when tax season hits, which will eliminate any unneeded headaches.
Here is more information about what to know when filing a tax return after your divorce.
To learn more about what our experienced attorneys at Wilder Mahood McKinley & Oglesby can do to resolve your tax issues, contact us online or call our office in Pittsburgh, Pennsylvania, at 412-261-4040.