It is no secret that divorce is a life-changing experience. Spousal maintenance, asset division and other considerations can cause immense stress, distracting you from work and other responsibilities.
In the midst of so much turmoil, paying taxes is probably the last thought on your mind. However, according to the Internal Revenue Service, divorce and separation can significantly affect your taxes.
If you are facing divorce or if you have questions about post-divorce taxes, contact the Zachary Law Group, PLC. Steven Zachary is a divorce lawyer in Chandler who can help you avoid mistakes and protect your financial interests.
Call 480-389-3533 to schedule a consultation. You can also visit the USAttorneys website to learn more about the divorce process in Arizona.
Here are five tips to keep in mind when filing taxes after a divorce:
- Determine your marriage status according to the calendar year.
If you finalized your divorce between New Year’s Day and the date you pay your taxes, you may still have to file as married. For example, if your divorce is finalized on Feb. 2, 2016, you will still have to pay your 2015 taxes as a married individual.
- Find out if you are eligible for “head of household” status.
If you are going through a divorce, you may be able to file as head of household. These taxpayers enjoy certain benefits, as Investopedia explains. However, you must qualify as head of household according to the IRS guidelines in order to avoid an audit.
- Determine if the IRS considers your children to be dependents.
According to the IRS, your children are only dependents if a court order identifies you as the custodial parent. If there is no court order, the custodial parent is generally the one with whom the child lives for the majority of the year.
- Find out if you can deduct spousal maintenance.
Spousal maintenance is an above the line bonus. Alimony is tax-deductible and comes with effective crosscheck enforcement to ensure payments equal reported income.
More convenient, you can enjoy the tax savings without having to itemize deductions. If your spouse does not provide a tax or social security number, he or she will face penalties.
- Consider selling your home before you get divorced to avoid an expensive capital gains tax.
If you win the house during the divorce and then choose to sell it, know that capital gains taxes are particularly steep. If a married couple sells their primary residence, they are exempt from taxes on a gain below $500,000. For single people, however, this exemption reaches its limit at only $250,000. Consider the tax implications in your decision to sell.
If you are considering divorce, contact the Zachary Law Group, PLC. As a Chandler family attorney, Steven Zachary can answer your questions and help you avoid mistakes. Unlike other divorce attorneys who charge by the hour, we offer flat-rate fees with no hidden charges. Call 480-389-3533 to schedule a consultation.