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Knowing your tax issues is important
Posted on January 22, 2014 in the Divorce category.
The tax filing season is just around the corner. In a few short weeks, millions of Americans will begin receiving tax information from their employers, or they will start the arduous task of figuring out what they owe in taxes (if they are self-employed). For those who are in the midst of a divorce, or have recently completed the process, this tax season will be different.
For instance, the typical deductions that you took advantage of in the past may not be available depending on your income and filing status. As such, it is prudent to understand some of the following issues as tax time rolls around.
What status will apply to you? – According to the Internal Revenue Service (IRS) there are five different filing statuses that could apply to you. The most common are married filing jointly, single, and married filing separately. It would be prudent to consult your attorney (as well as your accountant) to understand the pros and cons of each.
Will you have additional money to declare – Property settlements may have tax implications based on the acquisition (or sale)of property. With this in mind, it would be helpful to understand the tax basis of such transactions so that the proper tax may be paid.
Who will have custody – While this is commonly an emotionally charged question because of how it makes each party value themselves as parents, it also has significant tax implications as well. The party who is deemed the primary parent may have the benefit of claiming the Child Tax Credit. However, the use of the credit could also be negotiated.
Source: FoxBusiness.com, “7 tax mistakes you don’t know you’re making,” January 17, 2014