As if going through a divorce was not stressful enough for Sarasota couples, there are also a few issues related to taxes that need to be addressed by them as they start living their separate lives. Dependents, alimony, deductions, credits, and the new filing status are just some of the issues that each party should evaluate before the judge issues the divorce decree.
The first tax change is related to filing status. The Internal Revenue Service will treat a divorced individual as an unmarried taxpayer for the entire year when the dissolution of marriage took place. This means no longer being able to claim the tax benefits that some married couples enjoy when they choose “married filing jointly” as their taxpayer status. The next issue to consider deals with the deduction normally allowed for each dependent child. Although the IRS assumes that this deduction will be taken by the custodial parent, Form 8332 can be filed when this is not the case as stated in the settlement agreement.
Although many people will bristle at the thought of having to pay alimony, it should be noted that this is a straight deduction even if deductions aren’t itemized. Conversely, it is considered income to the recipient and must be reported.
Taxation matters after divorce are often mentioned by family law attorneys, but it is up to their clients to adjust accordingly. To this effect, divorce attorneys can sometimes recommend financial advisers who can start working with clients on tax strategies that will make their lives easier.
Source: Madison.com, “Getting Divorced? Here Are 4 Ways Your Taxes Will Change“, Wendy Connick, Sept. 24, 2017