Posted on October 9, 2017
Divorce takes a toll on you not just emotionally but financially as well. If you’ve been through a divorce this year, it’s going to make an impact on your taxes come tax season. Taxes can be complicated as it is, so how is your recent divorce going to affect your filling? Taking a look at the biggest filing questions can help you prepare and simplify your taxes next tax season.
Choosing the right filing status can be a little overwhelming when you’ve gone through a divorce during the year you’re filing for. There are four statuses you can choose from: “married filing jointly,” “married filing separately,” head of household or single. To make this easy, if your divorce was finalized any time by or before December 31, you can file as single. If you were still legally married on or after January 1 then you must file as married. Filing as “married filing separately” can be costly and bring up extra expenses, so choosing to file jointly is usually the best option for both parties.
If you have children you’ll have to decide who gets to claim them on your taxes. You can’t both claim the same child the same years. A good option for both parties is to take turns each year claiming your child on your taxes. If you have two children you can each claim one child. Try to come to a fair agreement before tax season because dependent exemptions can substantially lower your taxes.
Ownership of taxable property should be settled in the divorce. Maybe one person keeps the home and the other keeps the other income producing assets owned by the couple. Divorcing early in the year can be beneficial for couples who have a lot of income-producing property because it gives you more tax advantages.