Divorce is difficult, and it can be messy for many couples. With all the arguing and disagreements you may face, you may not think much about your taxes.
However, it’s imperative that you consider your tax situation and what it will be when your divorce is final. Knowing the facts can help you avoid issues with the IRS after your divorce. Here are things that you need to think about:
Your filing status
Your filing status for the year depends on your marital status on December 31st. Sometimes, couples wait until January to have their divorce finalized to reduce what taxes they owe. You can do this, but make sure you file based on your status to avoid penalties or fines.
The child tax credit
When filing your taxes, only one person can file for the child tax credit. It’s important to figure out who will do this before finalizing your divorce. Usually, the person who claims this credit is the parent the child resides with most of the time. In cases of joint custody, it may be an issue to have a judge decide as part of the divorce decree.
The tax implications of a divorce settlement
If property is transferred in your divorce, it probably won’t result in a tax liability. There are some exceptions to this, so it’s best to work with experts who can provide insight into your specific situation.
Understanding the impact of divorce and taxes
While your tax situation may not be top of mind when you go through a divorce, it is something you must consider. This will ensure you don’t make any mistakes that may result in repercussions. Knowing the legal facts will help you with this part of a divorce.