Income Taxes and Divorce
The New Year brings with it new hope, new plans, and new resolutions. It also brings with it new tax filings. If you were involved in a divorce or separation in 2014, it will most likely have some kind of impact on how you file your federal income taxes.
When it comes to filing taxes, your first need to determine your filing status. Even if you were married for part of 2014, you cannot file your taxes under a married status. Whatever your marital status is on December 31st will determine what status you will check off on your return.
For people who are separated, but not yet divorced, you do have an option to still file married. However, financial advisors advice that this may not be beneficial. You may receive a bigger tax break if you can file under head of household. To qualify, you must have lived apart from your spouse for the last six months, as well as be responsible for more than 50 percent of household expenses. If you qualify, then your spouse will need to file under the single status.
Another question is who will claim any children on his or her taxes. This question is often determined during divorce negotiations. However, if you are entitled to claim your children but are not the custodial parent, you must have your ex-spouse sign IRS Form 8332—Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent.
Alimony is another area that needs to be addressed for income taxes. Unlike child support—which is neither taxable nor deductible—recipients of alimony must claim it as a source of income on their tax returns. If you are paying alimony, you get to take the deduction.
How a marital estate is divided can also affect your income tax situation. Hence, it is important to have an experienced Geneva divorce attorney representing you during the divorce process. If you are considering a divorce, contact the Law Offices of Douglas B. Warlick & Assoc. today to discuss your options.