Divorce affects nearly every aspect of your life in some way, so it should come as no surprise that going through a divorce can impact your taxes. There are actually four major ways that this process can affect your tax liability, so it’s best to work with a tax accountant to prepare your return in the years following a divorce. For more information about your specific case, contact our Sugar Land divorce lawyers today.
YOUR FILING STATUS
The most immediate and obvious impact divorce will have on your taxes is your filing status. Most individuals will file as single people, rather than as a married couple (obviously this may not be the case if you quickly remarry, but that’s for another blog).
The divorce process alone will no longer establish which parent can claim children as dependents; instead, this will be settled after the divorce is finalized. Although the primary custodial parent is frequently able to take advantage of the tax deduction, it will often be taken by the parent who is paying the majority of child support.
Child support payments are not tax deductible for the payor, but the advantage of this is that the payee does not have to pay taxes on that income. Spousal support, on the other hand, is a completely different story. The person paying alimony can use the full amount as a tax deduction, while the recipient will need to report those payments as taxable income.
Dividing up your marital assets is already one of the most complex aspects of a divorce case, and it should come as no surprise that it will continue to be very complex when tax season rolls around. Depending on how your assets are divided, which assets go where, the total value of the assets, and a wide range of other factors, your tax liability may either increase or decrease. This can get highly complex, so it’s helpful to work with a professional tax accountant who can help you sort through it all.
If you’re considering divorce, Audu Law Firm can help. Contact our Sugar Land divorce attorneys today at (832) 789-8442.