Getting Divorced? Know About These Tax Issues You'll Need To Address
The messy part of divorce is dealing with changes in your financial situation. In addition to dividing assets, there will be changes to your taxes as well. Know about these tax issues you will need to address during a divorce.
Your Tax Filing Status
You may be going through a divorce, but there are still benefits to filing taxes as a married couple. If you are married to your spouse on the last day of the calendar year, you are still allowed to file a joint tax return for that calendar year. This can help you both receive deductions and credits that you may not otherwise be able to receive, which results in getting a larger refund that will be split between the two of you. You both may need this income, since you are going to be living independently soon.
For the next tax year, you'll have to file as an individual, as long as the divorce was finalized at some point in that year.
Your Alimony Payments
Any alimony payments that need to be made are not automatically classified as tax deductible. When they are classified as tax deductible, the person that receives the alimony payment could end up getting a bigger tax refund because of it, while the person paying the alimony payments will be able to lower their taxable income and pay less money in taxes.
Of course, there are some things you'll have to do to make sure that payments are tax deductible. For instance, the payments must be in the form of a check or cash. The payments must also be listed in a divorce decree, and the payments will need to end if the recipient passes away. This means that if you are paying support money that is not required by a divorce decree, then those payments are not tax deductible. If you are providing support by making a payment towards a bill or other expenses, then those payments are not tax deductible either.
A family lawyer at a law firm such as Cragun Law Firm can help ensure that all of the criteria are met for alimony payments to be considered a tax deduction.
Your Legal Fees
Know that some of the expenses from your divorce lawyer can be written off on your taxes. Any time that your lawyer is advising you on how to handle your taxes, those hours can be considered a write off. Make sure that your lawyer itemizes their time based on time that can be written off and the hours that cannot.