Tax Issues During Divorce
The divorce is underway, you and your spouse are living in separate homes, and the only contact you have outside of the divorce is in regard to the children, assuming there are any. You and your spouse are living separate lives and, except for the issuance of the final divorce decree, may feel as though you’re already divorced. But as far as the IRS is concerned, you and your spouse are responsible for taking care of your joint tax obligation.
Here are some common issues you may face while the divorce proceedings are ongoing:
Filing status. Until you are divorced you have two options: continue to file jointly, or file as “married filing separately”. Most couples continue to select the same option they used while married, which is usually to file jointly. There may be reasons why you would want to deviate from your past practice; your attorney can help you decide if it is in your best interest to do so.
Dependents. If you are filing jointly, there’s no issue regarding who claims the dependents. If, however, you choose “married filing separately,” you and your spouse must decide who is going to claim the children as a dependent on their tax return. In general, the custodial parent – the parent who has custody of the child the majority of the time – claims the child as a dependent. But in some cases it may make more financial sense for the non-custodial parent to claim the child. Or, if your incomes are relatively equal, and you have joint custody, you may agree to alternate who will claim the child. If you choose to allow the non-custodial parent to claim the child as a dependent, you will have to complete a special IRS form authorizing the non-custodial parent to claim the child as a dependent. Your attorney and accountant can help you decide whether there are any financial benefits in one spouse claiming the child over the other.
Child support. Child support payments are not deductible by the parent paying them, nor are they required to be reported as income by the parent receiving them. This holds true both during the divorce proceedings and once it is finalized.
Medical and Child Care Expenses. If you file your returns separately, you are entitled to deduct any medical and child care expenses you pay on the child’s behalf, even if you are not claiming the child as a dependent.
How our Boca Raton Divorce Attorneys Can Help
Divorce is stressful. So are taxes. Put the two together and you have the potential for a disaster in the making. In most cases, a couple going through a divorce will choose to file their tax returns jointly. But in those cases where it makes more financial sense for the couple to choose “married filing separately”, there are issues that will have to be decided upon sooner, rather than later. The Boca Raton divorce attorneys at Schwartz l White understand the tax implications associated with choosing to file separate tax returns while married, as well as the tax issues you will face regarding property division and child dependency exemptions once the divorce is finalized. Our experienced attorneys can help you navigate this tricky terrain to come to a solution that makes the most financial sense for your particular situation. Call us at 561.391.9943 and schedule an appointment to meet with an attorney to discuss your case.