Divorce can be quite a frustrating process. You have to learn to separate your life from your spouse, divide all of your marital property, and you may even end up having a limited amount of time with your children. It is quite the complicated process, and besides being quite emotional it can be very confusing to the average person.
Most people just think you have to file some paperwork, divide up the money, and split the custody of your children and you are done. This could not be further from the truth. There are many legal issues that need to be dealt with as well such as your taxes. The way that you file your taxes when you are married may be completely different than how you did when you were married. It is important to meet with a qualified attorney that will be able to explain step by step how your filing may change the year following your divorce.
How Alimony Affects Your Taxes
Most people that have to pay alimony are not too happy about it. Fortunately, you do receive a little break from your taxes when you are legally required to pay alimony. Alimony is considered income, so the person paying alimony will be able to write it off on their taxes. This also means that the person receiving the alimony will be required to claim it as income and therefore be responsible for paying the applicable taxes on the sum.
How to Decide Which Parent Claims the Children
Your child does not have to be living with you full time in order for you to be able to claim them on your taxes. Most people will claim the child or children as dependents on their taxes if they supply at least 50% of the support for them. It may be an exact 50-50 split between the divorced couple, but there are many ways that can be handled. The first option is to allow the parent that needs the deduction the most to claim the child. The second option is to rotate years, or you could even split the children if there is an even number.
Child Support
A lot of people get upset when they find out that the child support that they pay is not tax deductible. You are legally responsible for taking care of your children, you will get a deduction on your taxes if you claim your child, but the government does not reward people for taking care of their responsibilities.
There are steps that can be taken that will allow the non-custodial parent to claim their children on their taxes, but that will require the custodial parent to fill out and submit a Form 8332 to release the child to the noncustodial parent for tax purposes. If a custodial parent qualifies to file as head of household under these circumstances, the custodial parent may still be eligible for Earned Income Credit (EIC), child and dependent care credit and exclusion for childcare benefits for that child.
To qualify for head of household status, a person must (1) be either unmarried or considered unmarried on the last day of the tax year (December 31), (2) have lived with the qualifying child for over six months of the tax year, and (3) have paid for over 50% of the cost of keeping up the home during the tax year. To be €unmarried€ a person must have filed a separate return, not lived with the spouse for over six months, paid more than 50% of the home upkeep, and the home must have been the child's main residence.
The above are just a few of the tax implications of divorce. There are many other issues including possible effects to your IRA or other retirement savings, property, etc. Divorce is always complicated. Discussing your options with a Jacksonville divorce attorney early in the process will minimize future headaches.
Most people just think you have to file some paperwork, divide up the money, and split the custody of your children and you are done. This could not be further from the truth. There are many legal issues that need to be dealt with as well such as your taxes. The way that you file your taxes when you are married may be completely different than how you did when you were married. It is important to meet with a qualified attorney that will be able to explain step by step how your filing may change the year following your divorce.
How Alimony Affects Your Taxes
Most people that have to pay alimony are not too happy about it. Fortunately, you do receive a little break from your taxes when you are legally required to pay alimony. Alimony is considered income, so the person paying alimony will be able to write it off on their taxes. This also means that the person receiving the alimony will be required to claim it as income and therefore be responsible for paying the applicable taxes on the sum.
How to Decide Which Parent Claims the Children
Your child does not have to be living with you full time in order for you to be able to claim them on your taxes. Most people will claim the child or children as dependents on their taxes if they supply at least 50% of the support for them. It may be an exact 50-50 split between the divorced couple, but there are many ways that can be handled. The first option is to allow the parent that needs the deduction the most to claim the child. The second option is to rotate years, or you could even split the children if there is an even number.
Child Support
A lot of people get upset when they find out that the child support that they pay is not tax deductible. You are legally responsible for taking care of your children, you will get a deduction on your taxes if you claim your child, but the government does not reward people for taking care of their responsibilities.
There are steps that can be taken that will allow the non-custodial parent to claim their children on their taxes, but that will require the custodial parent to fill out and submit a Form 8332 to release the child to the noncustodial parent for tax purposes. If a custodial parent qualifies to file as head of household under these circumstances, the custodial parent may still be eligible for Earned Income Credit (EIC), child and dependent care credit and exclusion for childcare benefits for that child.
To qualify for head of household status, a person must (1) be either unmarried or considered unmarried on the last day of the tax year (December 31), (2) have lived with the qualifying child for over six months of the tax year, and (3) have paid for over 50% of the cost of keeping up the home during the tax year. To be €unmarried€ a person must have filed a separate return, not lived with the spouse for over six months, paid more than 50% of the home upkeep, and the home must have been the child's main residence.
The above are just a few of the tax implications of divorce. There are many other issues including possible effects to your IRA or other retirement savings, property, etc. Divorce is always complicated. Discussing your options with a Jacksonville divorce attorney early in the process will minimize future headaches.
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