How Divorce Affects Your Taxes – Understanding the Changes
Divorce is a complicated experience that changes your life in a big way. One more thing this change brings is the changes to your taxes. These can be disorienting, especially if you’ve been married for a long time. But, no matter the length of the marriage, your tax picture changes when your marriage ends.
Deciding What Your New Filing Status Will Be
You can no longer file with a “Married” status of any kind. You will have to choose between “Head of Household” or “Single.” A lot of this depends on who is the custodial parent of any children from the marriage. If custody and support are shared equally, the person that has a higher income can claim the Head of Household status, and the other person cannot… they must file Single.
Deciding Who Will Claim the Dependent Children
Although the advantages of claiming a child have shifted in recent years, and will no doubt continue to change as time goes on, it’s still an advantage to do so. Typically, the person that is considered the “custodial” parent claims the children on their taxes at the end of the year, but it’s possible for the non-custodial parent to claim them by submitting a form signed by the custodial parent saying they give up the right to do so.
Child Care and Alimony
Child Care payments are not considered as income, nor do they qualify as a deductible expense. Alimony gets a bit trickier, and a lot depends on when you were divorced. If you were divorced before Jan 1, 2019, your status falls under one set of regulations. People who divorced after Jan 1, 2019, will follow another set of rules.
Can You Deduct Lawyer’s Fees on Your Taxes?
Divorce can be expensive, and the bad news is… you can’t deduct lawyer’s fees for your divorce on your taxes. The laws on this go back and forth, but for now… no deduction.
Are you Confused? Call JStevens Accounting
These are some of the ways your taxes will be affected by your divorce. To make sure that everything is filed properly, you should use an accountant. At JStevens, we understand the changes to your taxes that divorce can bring, and we’re here to help you through this tax season. Call and make an appointment today!