Factoring taxes into the divorce equation
When Utah couples and families find themselves facing the prospect of divorce, a seemingly endless list of factors and considerations may come to mind. And in cases involving children, parents often try to account for all of their kid’s potential needs and concerns before they arise. What many people do not think about, however, is how divorce can affect their taxes. Given that it is tax season, here are a few tips couples should keep in mind during and after the divorce mediation process.
Filing status options
When it comes time to file taxes after a divorce, many people are confused about which status to file under. The simple answer is that your tax status depends on your marital status. For instance, anyone that divorced at any point in 2013 can file their tax returns as single for that year. Beyond that, many separating couples also have the option of claiming the head-out-household deduction. The individual that applies for the deduction must be the primary household provider and the couple must have lived separately for at least six months.
Support payments and taxes
Surprising to many people is the fact that child support payments are not taxable or tax-deductible. However, alimony is considered tax-deductible for the individual that pays it, while the person that receives it is responsible for paying taxes on the sum.
For families with children, it’s important to discuss and agree upon which parent will claim which child/children as dependents in their tax returns. A specific IRS form is required to identify dependents, and each federal deduction is considerable. Parents should keep in mind, though, that dependents should be 18 years old or younger and live with the parent claiming them for more than six months out of the year in most cases.