Tax Issues During A Divorce

Getting divorced takes time, money, and effort, and you might encounter some issues or questions during your divorce that relate to taxes. Your divorce attorney can help you understand how your divorce will impact your taxes, how to file, and ways you can benefit on your taxes through your divorce.

Impacts Of Divorce On Taxes

The way your divorce will impact your taxes will depend on your own personal situation. The main difference will be that you will have to file your taxes alone after your divorce is through. This means that you will have to file as head of household or single once your divorce is finalized. Filing as head of household usually offers tax savings for a single person who is divorced, but you must meet certain conditions in order to use this filing status.

How To File During Your Divorce

If your divorce is not finalized by the last day of the year, you must file your taxes in one of two ways:

1. File them jointly – This means that you will file your taxes like you have every other year with a joint return. The return will include the income from both you and your spouse, and you will both share in the return or in the balance owed.
2. File head of household and married filing separately – If filing your taxes jointly is not an option, you could file individually. To do this, one of you must file head of household and the other must file as married filing separately. The person who is paying over 50% of the household expenses typically gets the right to file head of household, and this filing status has some benefits over filing with the married filing separately status.

You can discuss these two options with your spouse to make a decision, or you can talk to your lawyer to find out which option he or she recommends for you.

Things That May Give You Tax Benefits

The third tax-related issue you should discuss with your divorce attorney involves things you can fight for in your divorce settlement that will offer tax benefits to you. Here are some of the things you may want to ask for to help you with tax benefits:

• Child exemptions – For your 2016 taxes, you will get an exemption of $4,050 for each exemption you have. You will always get to include yourself as an exemption on your taxes, but you may also want to fight for the right to claim your children too. These exemptions lower your taxable income, and having the right to claim your children may help you get a larger tax refund when you file your taxes.
• Child support versus alimony – Another thing you should understand, if you are planning on seeking custody of your kids, is that the child support you receive is not considered taxable income. You do not need to report this on your taxes, which is a good thing. On the other hand, alimony you receive is taxable and must be included on your taxes. Because of this, you might be better off pushing for more child support instead of fighting to get alimony.
• Selling assets could result in taxes – If you and your spouse have mutual funds, stocks, or other types of derivatives, you may want to split them equally in your divorce. This is a good and fair way to do this; however, you might want to find out what the best way is to do this for tax purposes. If, for example, you sell the stocks you have so you can divide the proceeds, you may both have to pay taxes on the profits from the sale.

If you are going through a divorce right now, talk to a lawyer, such as those at Karie L. Sanoba, Attorney at Law, about these tax issues. Your lawyer might have some good ideas to help you benefit from your divorce, and this could help you save money on taxes.