Newly Divorced? Your Tax Return May Not Change

Getting divorced is never easy. The emotional pain one typically goes through is hard enough, and that’s before you even bring the financial effects on separating into things. One of the most important changes you experience when getting divorced — at least from a financial standpoint — is how you now file your taxes. These are some things you’ll need to keep in mind.

Your Filing Status Doesn’t Always Change

If you are officially and legally divorced by midnight on December 31st of the filing year, you will file separately from your spouse. This can mean you may qualify as a “head of household” if you maintain custody of your children.  If your ex-spouse maintains custody of your children, you will then file as “single.” However, if you weren’t officially divorced until January or later of the following year, you’ll still file as “married.”

The Support You Receive or Pay Can Be Deductible

• Child Support: This is not considered income for the person who receives, and therefore doesn’t need to be claimed on your tax return.
• Alimony: This is deductible for the person paying it. The person who receives alimony must claim it on his or her tax return.
• If everything is rolled into “family support”, the child support is not deductible for the recipient, but alimony is deductible for the payer.

You Must Decide Who Is Claiming Your Child

If your divorce decree doesn’t specify who is claiming your children as deductions, the exemptions will go to the parent with whom the child lives. If you have joint custody, the exemption with go to the parent who had custody of the child for more days during the tax year.

You Can Change the Withholdings on Your W-4

If you’re employed, you can claim another exemption for every $3,600 of deductions, including alimony payments. If you’re the one receiving alimony, you could consider having more taxes withheld from your paychecks to make up for your new tax liability.

Let the team at American Investment Planners LLC been your resource this tax season. We have experienced many of the same situations our clients have, so we know exactly what solutions to offer. For more information about our tax planning services, please visit us on our website or give us a call at (516) 932-5130.

Cadaret, Grant and its representatives do not provide tax or legal advice. Tax advice provided solely by American Investment Planners LLC.