One of the least considered aspects of getting a divorce is how filing will affect taxes. With all these significant and drastic family changes that are taking place, the financial implications of divorce are probably not on the forefront of your mind. As tax season rapidly approaches, you should consult with a professional that can keep you informed of the ways you and your former spouse can minimize your tax burden and prepare for filing in 2015.
How will getting a divorce affect taxes?
Spouses that were still married, under the law, on December 31, 2014 can still file a joint tax return, so long as it makes sense. Depending on the child custody arrangement that you have worked out in your divorce settlement, you may also be able to file for head of household status, allowing a larger tax break than would otherwise be granted.
In addition, there are other things to take into consideration when filing:
- Claiming children as dependents
- Claiming medical expenses of children
- Whether alimony is taxable or tax-deductible
- Tax on child support received
- Splitting of 401(k) investments
- Sale of the family home
- Mortgage interest deductions
Divorce has the power to affect these claims in numerous ways. In some instances, knowing the financial considerations of filing can help you and your spouse decide when to divorce. If the situation between you is not terrible, staying married for a few months can make a significant difference on taxes. In addition, you can also work with a former spouse to come up with a scenario that works for you both. Claiming the kids as dependents is a great example. The parent that the children spend over half their time with can claim the children as dependents, but if their income is too high, the other parent can claim the children.
While there are flexible ways for spouses to work out complicated tax agreements, it is still crucial that they understand these new and changing implications to begin with. Working with a tax professional before finalizing the divorce can even ensure that these considerations are built into alimony payments amd prevent you from an unfortunate surprise.