Everyone gets into a marital relationship with a hope of living together with their partner for the rest of their lives, and when this doesn’t happen, it can be a very disappointing and disheartening moment. Divorce leads to a lot of changes in the lives of people involved, and this includes children of the divorcing couple. Among these changes is the division of finances which include assets and debts, businesses jointly owned, jointly held accounts, and taxes involved in any of these accounts. Handling taxation issues can be overwhelming during the divorce process, but the following points will help you understand how to deal with it.
1. When Do You File For Joint Or Separate Tax Returns?
If you begin your divorce process and by the end of the year the divorce is not yet finalized, then you will be required to file for your tax returns jointly, or if you have been filing before as married filing separately, then the same will happen. On the other hand, if your divorce gets finalized before the last day of the year, then you will be considered to have been single in that entire year and therefore can file your tax separately. However, if you decide to file for taxes as the Head of Household, you can be considered as unmarried despite that you are not yet legally separated. To qualify as Head of Household, you will be required to file separate returns for your ex-partner, not live with your ex for more than six months in that year, pay more than half of the cost required to keep up the house and maintain your support for the home your dependent child lives in. The good thing about all this is that you will benefit from paying lesser takes.
2. Impact Of Filing Jointly Or Separately
If you have been paying your expenses jointly with your spouse and decide to file jointly, you will benefit from a lower tax bill than it would have if you filed for taxes separately. Your Tampa divorce attorney should advise you on this because some tax credits, tax deductions and several other benefits will not be available or will be limited if you filed separately. However, depending on your situation, you can also reduce your tax bill while filing separately if one of you has an income that is limited to deductions due to factors such as high medical expenses.
In deciding whether to file separately or jointly, it is good to seek advice from your Tampa divorce attorney. Some couples may not be willing to file jointly even if they benefit from lower tax bills for various reasons. For instance, if one partner realizes that the other person has tax issues with the IRS, they would consider filing separately to avoid being liable after the divorce. Others desire to claim their tax refund separately, and it’s still a valid reason for filing a separate return.
3. Handling Unpaid Taxes
It is possible to have unpaid taxes among other debts when divorcing and it’s good that your Tampa divorce attorney knows every detail of all unpaid taxes. The best way to handle such taxes is by having them settled through the marital assets rather than carrying on the joint tax debt after the divorce.
4. Dependency Exemptions
Once the divorce is finalized, and matters concerning child support are settled, you need to know that the custodial parent will be the one to claim the dependency exemption and Child Tax Credit if you have a qualifying child. If the custodial parent wants to allow the other parent to claim the exemption instead, it is possible to do so by signing form 8332. However, since the qualifying child is expected to meet the residency test, only the custodial parent can claim Child Tax Credit, and this makes it hard to allow the other parent to claim it even if they are willing to do so.
0 Comments