As we begin the first week of March, we know that this month is known for three things: the end of winter (and hopefully the end of snow), the NCAA Tournament, and the frantic rush to complete federal income tax returns. It is natural that our readers look forward to the first two, but getting tax returns ready may be anything but simple for those in the midst of a divorce or are completing their first tax return since finalizing one. Simply put the uncertainty and questions that may drive them crazy. With that said, we offer a post that can help answer some of the most common questions you may have as a new (or soon to be) divorcee.
What is your tax filing status? - Even though you may be emotionally divorced or may be living separately, your tax filing status may not change until your divorce is finalized. Essentially, if you were still married on December 31, 2017, you are still considered to be married for tax purposes.
Who claims the child tax credit? - Even though you may currently have joint physical custody of the kids, there may be questions over who can claim the child tax credit each year. Basically, only one parent may claim a child on their return. So there may have to be some compromise over how it is used. Perhaps the parents can alternate its use each year. If there are multiple children, perhaps each parent can claim one.
Is there additional income to report?-If your divorce settlement includes profits realized from the sale of real property or securities, you could be subject to capital gains taxes.
If you have additional questions regarding the tax implications of your divorce settlement or decree, an experienced family law attorney with tax experience can guide you.