March 17, 2022 | Share
What You Need to Know About Filing Taxes During and After a Divorce
Tax time is loaded with stress even when you aren’t struggling with the consequences of divorce. Adding divorce to the equation can lead to severe anxiety. If you are in the midst of the divorce process, your divorce lawyer and accountant can work together to ensure that you have arrangements in place to handle new taxes issues you face now and those that may be on the horizon. Here are some tax matters McKinney divorce lawyers know you may need to consider during and after divorce.
Can You (and Should You) File a Joint Tax Return?
Although you may feel as if your life is now completely separate from your estranged partner, if your divorce was pending on December 31, 2021, then you are still considered married for tax purposes for that tax year. The IRS gives you the option to file your tax return jointly or separately.
In most cases, it is a good idea to compare how the numbers come out if you file jointly with the results if you file separately. A great many tax credits and benefits are limited or not available when married couples file separately. There are times, however, when a separate filing produces better financial results, especially if one partner can take deductions that are calculated based on a percentage of their income.
Can You File as Head of Household?
Even if you are filing a separate return, you might still be able to take advantage of some tax benefits. For instance, if you file as “head of household,” you get a better tax rate than you would if you filed as a simple single individual. The IRS allows you to file as head of household if:
- You qualify as “unmarried” on the final day of the tax year
- A qualifying person lived with you for more than half the tax year (if you support a parent, the parent does not need to live with you to be a qualifying person)
- You paid more than half the cost of keeping up your home during the tax year
Even if your divorce was not final by the end of December, you might still qualify as “unmarried” if your spouse did not live with you for the last six months of the year.
Additional Tax Issues to Consider During and After Divorce
Depending on your situation, there may be several other issues McKinney divorce lawyers can help you address with your ex as well as your accountant. If you have a child, only one of you will be able to claim the child tax credit and childcare credit for that child. (If you have more than one child together, each of you can claim benefits associated with one of the children.) The IRS expects the parent with primary custody to claim the tax credits, but that parent can waive their rights with the appropriate documentation.
If you owe back taxes or will owe capital gains tax on the sale of your family home, you and your ex will need to allocate those expenses.
McKinney Divorce Lawyers Can Help if You Need to Resolve Tax Issues with Your Ex
Hopefully, you already have an agreement in place to address these critical tax issues. If you do not, an experienced divorce lawyer can negotiate an agreement to resolve outstanding issues so that both of you understand your rights and obligations now and in future years.
To talk to one of the dedicated McKinney divorce lawyers at Nordhaus & Nordhaus, PC about how we could assist contact us today.
Categories: Family Law & Divorce