When you get a divorce, there are dozens of things that you will have to do before the dissolution of your marriage is finalized. Many important issues must be settled, such as determining how you will divide your marital property and working out a parenting plan, and it is easy for some details to be forgotten or left on the back burner. Though your tax situation may not be at the forefront of your mind during the divorce, addressing it is important nonetheless. Here are three tax considerations that you should be sure to keep in mind.
Update Your Tax Filing Status
When you file your taxes each year, you will need to note your filing status, which influences the deductions you can claim and the income tax you may owe. Many married couples file their taxes as “married filing jointly,” but once you are divorced, you must revert to filing as “single” or “head of household” depending on your circumstances. However, your filing status will depend on when your divorce is actually finalized. The IRS considers you to be married for the entire year if your divorce was not finalized by December 31 of that tax year. On the other hand, you are considered to be divorced and unmarried for the entire year if your divorce is granted by December 31.
Determine Who Will Claim Dependents
If you and your spouse filed a joint tax return in the past, you may have both benefited from being able to claim your children as dependents. However, when you are divorced and file separate tax returns, only one parent can claim each child. You and your spouse will have to determine who claims each child and how the tax benefits may affect your allocation of property.
Consider How Spousal Maintenance Will Affect Your Taxes
For years, the paying spouse in Illinois could deduct spousal maintenance from their federal income taxes, and the receiving spouse was required to report maintenance payments as taxable income. However, since 2019, this is no longer the case. If spousal maintenance is awarded in your divorce, both spouses should be sure to understand how these recent changes to the law will affect their case.
Contact Our Naperville, IL Divorce Attorney Today
You may not automatically think about your tax situation when you file for divorce, but it is something that you should consider before you sign on the dotted line. At the Goostree Law Group, we can help you with all areas of divorce, including factoring in the tax consequences of your resolution. To schedule a free consultation with one of our DuPage County divorce lawyers, call our office today at 630-364-4046.