Tax Considerations for Divorced Couples
If you are considering divorce, or already received a final divorce judgment, you may have questions about your tax filing status, what deductions you can claim, or which parent claims the child as a dependent for tax purposes. Fortunately, most tax considerations are contemplated and agreed upon in a marital settlement agreement. But, not all parties adhere to those terms even if all provisions were incorporated into a final divorce judgment. If you have questions about filing post-divorce, or if your ex-spouse/co-parent is not honoring those terms, call the family law attorneys of Eveland & Foster, LLC for guidance.
Filing Status Questions
If your divorce is finalized within the same calendar year, for example by December 31, 2020, then you cannot file joint tax returns for the year 2020. But if your divorce is still ongoing throughout 2021, you can file jointly for 2020, but would file as single or head of household in 2022 for 2021 taxes. You can only file as head of household status if you and your spouse agree to designate you because you both share children. But you must have custody of the child for more than half of the year and contribute to most of the household upkeep expenses to qualify.
If you sold real property during the divorce, such as the marital home or an investment property, you may have to pay additional taxes or capital gains on rental property, but consult with your accountant or real estate agent to be sure. Keep copies of all W-4s, paystubs, 1099s, and income statements from interest-bearing accounts or retirement accounts. Also keep a copy of your marital settlement agreement handy when you start the filing process, and consult our attorneys if you have any lingering questions.
Usually co-parents who share more than one child together will choose one child each to claim on their taxes each year. If parents have an odd number of children, some parents choose to alternate between odd and even years in claiming the third or fifth child. Similarly, if you share one child together, you might alternate odd or even years when claiming the child dependent tax credit. However, this only applies if the parents share joint physical custody with overnights.
If one parent strictly has visitation every weekend, every other weekend or a similar arrangement, they can almost never claim the child as a dependent for year-end tax filing purposes. This is because they do not meet qualifications, even if they contribute to the child’s expenses via monthly child support payments. Also, if you have stepchildren and file jointly with your spouse, you, your spouse and your spouse’s ex-spouse/co-parent need to decide who is filing what years for which dependent. A stepparent can claim a stepchild as a dependent because they are related by marriage, as long as the child lives with the stepparent for more than half of the calendar year.
Schedule a Consultation Today
Whether you have simple or complex questions about tax implications after divorce, our lawyers at Eveland & Foster are prepared to answer them. We specialize in family law and can assist you no matter how difficult or trying the problem may be. If necessary, we can also provide referrals to tax attorney specialists in the event you are audited or investigated by the Internal Revenue Service. But, if you have not filed yet, or if your ex-spouse wrongfully claimed your shared children as dependents when he or she does not have primary or joint custody, you need to take action as soon as possible. Our attorneys are conveniently located in Morristown, New Jersey and are ready to assist you. Call today to review your options.