Your divorce and how it will impact your tax return

| Jan 30, 2015 | Divorce

If you’ve seen an increase in the number of TurboTax commercials on the TV, then you probably know that one important thing is just around the corner: tax season. Many people consider this to be a stressful time of the year, especially those who have become recently divorced because it can easily generate a copious amount of questions that are not easily answered by the incredibly complex tax code.

That’s why, in this week’s blog, we wanted to help out those of our readers who are going through the divorce process or perhaps those who have just finished signing the last legal document. In today’s post, we want to highlight a number of important things you will want to keep in mind when you are filing your taxes this year. That’s because, whether you realize it or not, your divorce could have a bigger impact on your return than you think.

The first and perhaps the most important thing to consider is when your divorce was or will be finalized. That’s because the IRS takes your marital status into consideration when determining your tax bracket as well as your deductions and credits. Whatever your marital status is on the last day of your tax year is important to keep in mind.

Who is claiming head of household? This is an important question to have an answer to when it comes to filing taxes because it can mean higher deductions and a lower tax bracket for the ex-spouse who earned at least 50 percent of the household income in the tax year.

Divorcing and divorced couples should also consider support payments made in a particular tax year as well. That’s because payers of alimony may claim these payments as a deduction on their taxes. The same is not true however for child support payments, which are neither deductable nor taxable for tax purposes. You’ll also want to consider other deductions and credits such as child care costs and adoption fees.

Because we were only able to touch on a few parts of your taxes that could be impacted by your divorce, you may still have some questions about what will happen after the divorce dust has settled. While some of these questions are best directed towards a financial adviser, some can be directed towards a skilled family law attorney who may also have this knowledge at their disposal.

Source: The Internal Revenue Service, “Publication 504 – Main Content,” Accessed Jan. 28, 2015