There can be severe tax implications for both spouses after a divorce. It does not matter if they have recently filed the petitions or just finalized their divorce agreement. You might wonder what filing report to use when you just finished your divorce. If the divorce was completed just before the end of the year, you could not file a joint return for that year, and you have to think about the divorce tax impacts. Contacting a Newburyport family lawyer can help you know your rights after the divorce.
What to expect when filing taxes after divorce
Determining the correct filing status
Selecting the correct filing status depends on whether the divorce was finalized on or before 31st December, which is considered the final day of the tax year. If the divorce were finalized before this date, the ex-spouses would not be able to file joint tax returns. The IRS will recognize the couple as married if the divorce is completed after the new year begins. It means they can file for a joint return for the previous year. Even if the couple is eligible to file for a joint return, they can still choose to file separately.
Updating W-4 form
If both the spouses are employed, they have to fill out a W-4 form. This form is used to determine the amount of money that should be withheld from the spouses’ paychecks. Joint filers should split their W-4 form withholding between both spouses. Therefore, if a couple divorces, they have to recalculate or adjust their allowance.
Child support deductions and alimony
The alimony payments made to another spouse when the divorce was finalized before 1st January are considered “above-the-line” tax deductions. Suppose the divorce was finalized after this date. In that case, you should contact a knowledgeable attorney who will help you determine if you can reduce the alimony payments from your adjusted gross paycheck.
Although modification was made to the law that prevents the paying spouse from reducing alimony, alimony payments accepted from divorces finalized before 1st January qualify as income until the divorce agreement says so.
Child support payments made to an ex-spouse can not be deducted like alimony payments. Spouses who receive child support also can not report it as income on t their tax returns.
Who can claim the children as dependents?
The spouse who is considered the custodial parent can declare the child as dependent on their taxes. The custodial parent is the child who mainly lives with during the tax year.
The custodial parent can claim the EITC or Earned Income Tax Credit and the child and dependent care credit. You can still file as head of your household if you file taxes after your divorce, but it might impact your income tax bracket.