Marriage and divorce can change how you live your life and even how you file your income taxes. Being aware of the choices you have when it is time to file your taxes is important. Getting advice regarding your taxes during and after a divorce can mean more money in your pocket.
Your status for filing can determine how much money is reported on your tax forms. Your tax bracket, your exemptions and even what credits and deductions you are allowed to claim all depend on your status. Your marital status on the last day of the tax year, December 31, will be the deciding factor for your filing status. Even if you are currently seeking a divorce, your status will be married on your return. The only way to claim yourself as single for filing status is if you have a divorce decree or separate maintenance by December 31.
You may be able to file as head of the household if there is at least one dependant who lives with you. Most married people file separately or jointly depending on their preference. When filing jointly, all income and deductions are included on one return. Both people on the return are responsible for the tax liability even if there was only one wage earner.
Filing separately can cause you to pay a higher tax rate and prevents you from claiming some credits such as Earned Income Credit and education benefits. It can relieve you of any tax liability though, so it may be worth looking into.
You are able to deduct legal fees and any tax advice that you paid for that are related to the divorce and also any legal fees that you paid in order to receive alimony. Alimony is defined as a payment that is written in the decree.
You can deduct any alimony payment you made even if you don’t file an itemized return but you must be sure to put your ex-spouse’s social security number on the return.
If you face a divorce, you may want to contact a professional who can give you a clearer, more detailed explanation of what you need to do to protect yourself at tax time and any other time.
Source: Las Vegas News Trip, “How marriage and divorce can impact your taxes” No author given, Apr. 05, 2014