Navigating your Divorce During Tax Season

Rolling Meadows Divorce Attorney

Getting divorced is a life-changing financial event for most individuals. Through your divorce, you go from being part of a team that holds joint assets and can provide two or more income streams while enjoying benefits like the ability to file your tax returns jointly. After your divorce, you have to live your financial life as a single person once more, only now you might face new expenses like debt related to the divorce and spousal or child support payments. If your divorce is pending during tax season, talk to your lawyer about the tax issues you can face and how to navigate them.

Should I File for Divorce Before or After I File my Taxes?

You might be considering putting off your divorce until after you file your tax returns for last year. There are benefits to filing your taxes jointly, such as higher income thresholds for certain deductions.

Putting off your divorce until after tax season can also help you avoid the headaches of balancing the demands of the divorce and the demands of filing your taxes. Getting divorced can be expensive, so if you anticipate owing money to the government after your taxes are filed, taking care of this expense before accruing new ones through the divorce process can be a smart strategy.

Before you are divorced, all of your marital assets and debts both partners’ responsibility. This includes the money received through your tax return, if you receive overpayment compensation. This money may be considered in your property division settlement, as will the tax burden of each marital asset. When the court divides a divorcing couple’s assets, it tries to do so as equitably as possible to avoid creating an unfair financial burden on one partner.

Pitfalls to Avoid if you are Divorcing During Tax Season

Just because you can file your taxes jointly does not mean you have to. In some cases, such as those where the partners do not want to be liable for each others’ tax liabilities, it can make sense to file taxes as married, filing separately.

If you do file your taxes jointly and then find yourself saddled with liabilities and penalties incurred by your spouse, you can seek relief from the IRS. Talk to your lawyer or your accountant about Innocent Spouse Relief, Equitable Relief, and Separation of Liability Relief to avoid having to pay for your penalties or tax liabilities.

Consider filing as Head of Household if you qualify. In order to qualify for this status, which can lower your tax bill by giving you access to certain deductions, you must be divorced or have been living separately from your spouse for at least six months. To qualify as Head of Household, you must maintain the home where your child resides and pay more than half of the household expenses for the home. You can do this even if you do not claim your child as a dependent.

Filing your Taxes After your Divorce is Finalized

If you have already completed your divorce, know the tax procedures you will face as a newly-divorced individual. If you make spousal maintenance payments, you can deduct it on your tax return. If you receive spousal maintenance payments from a former spouse, you must report it on your tax return.

If your child spends more than half of his or her time in your home, you may claim him or her as a dependent. Some couples determine which partner will claim the child as a dependent in their divorce settlement. If you did not do this, the parent who has the bulk of the child’s parenting time has the right to claim him or her. Both parents cannot claim the child as a dependent. The parent who claims their child as a dependent can also claim the Child Tax Credit.

Work with an Experienced Rolling Meadows Divorce Lawyer

If you are considering filing for divorce in the near future, work with an experienced Rolling Meadows divorce lawyer who can help you work through every issue at play in your divorce. Donald J. Cosley of the Law Offices of Donald J. Cosley can provide the advice and representation you need to adeptly move through each step of the divorce process while outside factors, like tax season, are a concern. Contact our office today to schedule your free consultation with Cosley Law Office.