Divorce and Taxes

When you and your spouse separate, it can be a costly and largely expensive ordeal, especially with all the changes to income, and things like taxes. It is important to make sure that you file the right way when it comes to your taxes. If you are still in the process of divorcing, you may want to file jointly or separately; although, jointly often results in lower taxes. If your divorce has been finalized by the end of the year, you must file as a single person or head of the household if you have a child. Head of the household filings tend to offer more tax breaks and other advantages than just single person.

If you do have children, claim an exemption for them if you can. You may receive lower taxes by taking the dependent exemption for your child, if you were legally separated or divorced last year. You may also be eligible for the child care and educational tax credits. Remember, you cannot deduct any child support payments, also.

If you are receiving alimony, you may owe taxes on that income; if you are paying alimony the opposite applies.  The IRS has many stipulations over what qualifies as alimony and when the person can write off payments. Things like property do not meet the alimony test, unlike cash, checks, or money orders.

It may be wise to contact a financial adviser  or tax professional to help you plan out your expenses and get you the most back on your returns in years to come. If you are considering a divorce, make sure that you contact a trusted attorney who can help answer some of these concerns and help you plan a new future.

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