3 Tax Situations To Consider When Divorcing

There are many issues that you and your spouse need to address before your divorce can be finalized. One of those is how you file your taxes now and in the future. Here are four common considerations that need to be resolved before your divorce can be finalized.

Current Filing Status

Some people believe that since they are getting divorced, they have to file with a single or head of household status. This is not true. If you and your spouse have a financial maintenance order or equally contributed to the upkeep of your household, you can file married filing jointly.

This filing status can be beneficial for several reasons. One major benefit is that you and your spouse could receive more deductions, which could result in a higher tax refund.

Legal Fees Deductions

You cannot legally deduct your attorney fees that you incurred during your divorce on your taxes. However, if your attorney offered you legal advice on how to handle your taxes during the divorce, you can deduct the expense related to that conversation.

Your attorney should be keeping a detailed log that shows the services he or she offered you. Ask the attorney to provide you a copy of the log so that you can use it to prove that the legal fees you deducted were from the conversations regarding taxes. Without it, you could lose the deduction and end up owing money if the Internal Revenue Service audits you.

Child Dependency Credits and Deductions

There are several deductions and credits that are related to claiming a dependent child on income tax returns, such as the Earned Income Credit. In most instances, the person who claims the deductions and credits is the custodial parent.

Before finalizing your divorce, you and your spouse need to determine who will be claiming the child now and in the future. Even though the custodial parent usually has this right, it is not unusual for the non-custodial parent to claim the child if an agreement is made.

You and your spouse will need to complete a Form 8332. The form is an agreement stating who will claim the child and for which tax years. The parent claiming the child will need to include the form with his or her taxes.

There are many other tax-related issues that need to be settled before you and your spouse settle all of your marital issues. Talk to your family attorney, like Leonard & Kershaw, to ensure that you and your spouse have covered everything to avoid surprises later.  

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