Divorce and Taxes: What You Need to Know

We understand that divorce can be a rollercoaster of emotions and decisions. But don’t worry, you’ve got this! One thing that’s super important but often gets overlooked is how divorce impacts your taxes. Lets break it down so you can navigate this with confidence.

Figuring Out Your Tax Filing Status

First things first, your filing status will change. You’ll go from “married filing jointly” to either “single” or “head of household,” depending on your situation. It’s a good idea to chat with a tax professional to figure out which status is best for you.

Alimony and Child Support

Here’s the scoop on alimony and child support: if your divorce was finalized after 2018, alimony isn’t considered taxable income for the recipient and isn’t tax-deductible for the payer. Child support? That’s not taxable income or tax-deductible either. Keep good records of any payments and check in with a tax advisor to make sure you’re on track.

Dividing Assets

Splitting up assets can get tricky tax-wise. Things like retirement accounts or real estate can lead to taxable events or capital gains taxes. It’s super important to get advice from a financial advisor or tax pro to understand what these moves mean for your taxes and plan ahead.

Who Gets to Claim the Kids?

Deciding who gets to claim the kids for tax purposes can be a bit of a hassle. Usually, the custodial parent claims them, but you can agree to split the benefits differently. Make sure any agreements are documented in your divorce decree or settlement.

Tax Deductions and Credits

Don’t miss out on potential tax deductions and credits! Post-divorce, you might qualify for deductions for legal fees, mortgage interest, or credits for childcare expenses. Again, a tax professional can help you maximize your savings.