One of the most overlooked aspects of a divorce is how it will affect the income tax filings of both parties. Each case is unique, and divorce will impact each party differently when it comes to income taxes. However, the information below should give you a general idea of the role a divorce can play in your tax filings.
Divorce Changes Your Filing Status
Perhaps the most obvious change to your income taxes is that you will now be filing as a single person, rather than as a married couple. This will often cause your taxes to be higher, but in some instances they may actually be lower, if your individual income puts you in a lower tax bracket.
One common point of confusion for divorcing couples is when the divorce actually takes effect for tax purposes. In the eyes of the IRS, your marriage status at the end of the year will dictate your filing status. If you are divorced on the very last day of the year, you will file as a single person.
Who Claims the Children?
Deciding who can claim your children as dependents is one of the most complex matters you may face after a divorce is finalized. Unfortunately, this is no longer something that will be settled during the divorce process, and only one parent can use this deduction.
While many people may assume that the primary custodial parent will be able to take advantage of the tax deduction, this is not always the case. If the non-custodial parent pays the majority of support for the child, or if they have a significantly lower income, a judge may order the custodial parent to yield the deduction.
Support Payments Can Impact Your Taxes
For the parent making child support payments, they unfortunately cannot be used as tax deductions. However, the person who receives child support payments does not need to pay additional taxes on this income. Alimony, on the other hand, is fully deductible for the person paying it, and the recipient must report all spousal support payments they receive as taxable income.
Asset Division Can Play a Role
Depending on what marital property is on the table, and how it's divided, divorce may increase or decrease your tax liability. There are countless scenarios involving family homes, student loans, and a wide variety of other assets and debt, all of which can have different impacts depending on your unique situation. Due to the complexity of this area of law, it's helpful to consult with an experienced Las Vegas divorce attorney to fully understand your obligations after a divorce.
Getting Divorced? Call (702) 996-6052.
At Leavitt Law Firm, our experienced Las Vegas family law attorney has handled complex divorce cases for more than 25 years. When you retain our firm, you can count on Attorney Dennis Leavitt to be a tireless advocate for your best interests.
Trust our experienced attorney to guide you through the divorce process. Call Leavitt Law Firm today at (702) 996-6052.