Manage Your Taxes During Divorce
April 15th. Every adult knows that date, and most regard it with a sense of dread. Tax time is rarely a fun time of year, and if you are also currently undergoing a divorce, filing taxes can seem like an entirely insurmountable obstacle.
Physical property is divided, bank accounts are split, interest payments on student loans get shifted around, and household income is halved. Keeping track of where everything will be compared to where it was can seem exhausting.
Luckily there are a few little tips that you might be able to apply to your situation.
The biggest tip first and foremost is that unless your divorce filing is legally accepted and finalized, you are still married according to Uncle Sam, and your filing should reflect that. Therefore, if your divorce won’t be finalized until May, for example, you can focus purely on getting through that before you worry about the IRS. You don’t need to panic on April 10th because you’re in the midst of a filing.
Property division and its tax implications can get tricky, and it is worth having an attorney to help you through the process. Even if you are collaborating and making the division decisions yourself, you need to be aware of any special tax stipulations that go along. Keep in mind, too, that often times things like tax advice are tax deductions.
Alimony has a number of tax rules related to it as well. Paying alimony is usually tax deductible, receiving alimony is often a tax liability, and even things such as helping pay a mortgage on an ex’s house can sometimes be deductible as alimony (even interest and property tax).
Do not forget about children. While you usually can’t deduct most of the ordinary child support costs (food, school supplies, clothes, etc.), oftentimes things such as medical expenses can be deducted. Also, if the child lives with you more than half the year, you might be able to claim them as a dependent, which can greatly reduce your taxable income.
These are just a few tips and suggestions, but they are all worth going over with your attorney. They will be able to provide you with the hard and fast rules about how your particular divorce will affect your tax filing for the next year. If you ever have questions or concerns, be sure to get in touch with a skilled family lawyer right away.
Source: https://www.nerdwallet.com/blog/fi-library/fi-library-taxes/managing-taxes-divorce/
