What You Need to Know About Divorce and Taxes

Unfortunately, divorce is a fact of life. At least half of all married couples end up dissolving their marriage for any number of reasons. However, when you get divorced, what happens with your taxes? These are the things you need to know about what happens to your taxes after your marriage has officially ended.

 

Tax Filing Status Changes

 Your tax filing status is determined by your marital status on the very last day of the year. That means if your divorce is not finalized until January, you will have to file your taxes as a person who is married. However, you can have an accountant determine whether it is in your best interest to file your taxes jointly with your ex-spouse or if it benefits you more financially to file separately. If your divorce is final by January 31 or earlier, you can file your taxes as “single” or as the head of the household. It is worth noting that, in order to qualify to file as head of household, you are required to have paid over half the costs associated with the maintenance of your home for that year. Additionally, your former spouse must have lived outside of your home for a period of at least six months.

 

How You Claim Dependents

After parents have gone through a divorce, the Internal Revenue Service allows the primary parent, the parent who spends the most time with the child, to claim the child as a dependent. This means that as the primary parent who has physical custody of the child, you are required to claim the child. When claiming on your taxes, you must claim the dependent tax care credit, child tax credit and earned income credit.

 

Child Support and How it Affects Your Taxes

 

You cannot claim taxes for child support if you have been required to pay it to your ex-spouse after your divorce. Child support is not deducted from your income as a result. If you are the parent receiving child support, you are not required to pay any taxes toward it.

 

Division of Assets

 

After a divorce, the majority of the assets you gained during the course of the marriage can be divided without a transfer tax. There are a few exceptions to that rule, such as when considering money taken from a retirement account as that can be taxed.

 

Property Taxes

 

If you have been granted the right to keep your home as part of your divorce settlement, you are responsible for all taxes related to it. It’s important to discuss the matter with your attorney so that you can learn how to avoid receiving a hefty tax bill.

 

Profits from Home Sale

 

If you and your former spouse decide to sell your home after your marriage ends, you can deduct $250,000 of the total profit from your taxes.

 

Legal Fees

 

Some legal fees from your divorce are tax deductible. You can deduct items such as alimony, tax advice and for securing taxable income.

 

If you live in the state of Utah and you and your spouse have decided that divorce is your only option, contact Eric M. Swinyard at your earliest convenience. He will meet with you to discuss all your options toward ending your marriage and what comes afterward.

About the Author:

I’m a 29 year old multi-business owner, avid risk taker, single mom & digital nomad. Work life balance is the life blood of my success. I have existing business & marketing columns at Business.com, BPlans.com and Social Media Today, and a travel/lifestyle column at Elite Daily.

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