If you are in the midst of getting a divorce or are recently divorced,
taxes might not be at the forefront of your mind, but you still need to
take the time to understand the impact it could have on your taxes. Everyone
knows that divorce can affect your finances, but rarely does the topic
of taxes arise in these conversations.
Below are some of the key tax tips you should keep in mind while filing
Child support: These payments are neither tax deductible, nor are they taxable, so regardless
of whether you end up receiving or paying child support, this will not
impact your taxes. However, while child support has no impact whatsoever
on your taxes, child exemptions do, and they generally go to the parent
who wins child custody. Child exemptions can be quite sizeable, so if
your divorce is not relatively civil, things could get ugly.
Head of household status: The ex-spouse who gets to claim head of household filing status on their
income tax return is typically entitled to a more generous tax bracket
and a bigger standard deduction. To qualify, you need to file your own
tax return and you and your spouse cannot have lived together within the
past 6 months of the tax year. Additionally, you must have a qualifying
child living with you for more than 6 months of the year, even if he or
she can be claimed as a dependent on your ex’s tax return.
Alimony: On the other hand, if you are paying alimony, you can deduct these payments,
regardless if you itemize deductions. If you are making voluntary payments
outside of a divorce or separation decree, they will not be tax deductible.
If alimony payments are being made to you, the money is taxable in the
year that you receive it and it is not subject to tax withholdings, which
means you might need to increase the tax you pay during the year to avoid
a penalty. To accomplish this, you can make estimated tax payments or
choose to increase the amount of tax withheld from your wages.
Spousal IRA: If, by the end of your tax year, you receive a final decree of divorce
or separate maintenance, you cannot deduct the contributions you make
to your ex-spouse’s traditional IRA, though you might be able to
deduct contributions made to your own.
Healthcare: Even if you lose health insurance coverage as a result of your divorce,
you are still required to have coverage for every month of the year for
yourself and any dependents you claim on your tax return. If you are divorced
or legally separated during the tax year and you and your former spouse
are enrolled in the same qualified health plan, you will both have to
allocate policy amounts on your separate tax returns to determine your
premium tax credit and reconcile payments made on your behalf.
Ultimately, whether or not you experience any savings on your taxes as
a result of a divorce will depend entirely on your specific circumstances.
Divorce Attorney in Long Island
Moving forward with the decision to divorce is not easy, even when necessary.
Instead of trying to field your way to this complicated and emotional
process, hire a Long Island divorce attorney who will help you navigate
every step with compassion and efficiency. At Friedman & Friedman,
Attorneys at Law, we provide skilled legal counsel and results, all at
an affordable cost.
For the experienced representation you deserve, contact our office at
(516) 688-0088 to speak with a Long Island divorce attorney.