When it comes to divorce, timing is everything ”“ divorces are rarely stress-free and usually it is best to handle a divorce when you don’t have other matters on your plate. But as the old adage goes, the best-laid plans of mice and men often go awry ”“ when your divorce comes up during tax season, it’s going to be a little more complicated.
It is incredibly important to be aware of how divorce is going to affect your taxes. If you make mistakes, you might have to deal with an IRS audit, and no one going through divorce should have to suffer at the hands of more bureaucracy.
Here Are Some Steps To Take To Help Make Sure Your Taxes Are Done Correctly.
1. Know your filing status! Are you married, filing jointly? Married filing separate? Head of household? Unmarried or single? To answer, you need to know when your divorce is finalized. If it was finalized before December 31, you can safely consider yourself single or the head of household for tax purposes. If your divorce wasn’t finalized until the new year, you’ll still be married for your tax filings.
2. Know your dependents. Only one of you gets to claim each dependent, so you will have to work with your spouse to determine whom. If both parties claim the same dependent, you may be audited.
3. Know your deductibles. Child support is not deductible. Alimony (maintenance, as we call it in Colorado), on the other hand, is, and the recipient must claim it as income. Know how the transfer of property will affect your taxes. Have an attorney help you draft a QDRO to prevent tax penalties relating to retirement accounts.
A Denver divorce lawyer can help you plan for the potential financial ramifications of divorce.