If you’re going through a divorce, you’ve probably got a lot on your plate. Between the property division, the alimony payments and the child custody issues, your taxes are probably the furthest thing from your mind.
However, it’s worth knowing that divorce can impact your taxes in positive ways. In this article, we provide three potential benefits you could stand to reap from your divorce:
Filing status: If you’re like most people, you expect that once you’re divorced, you file your taxes as “Single.” However, if you have any children who live with you for more than half the year, and for whom you pay more than half of their expenses, then you could actually qualify to file as “Head of Household,” which usually earns you a bigger tax break.
Dependent exemption: Certain dependents can qualify you for this $3,8000 exemption. To be eligible, your dependent must live with you for at least half the year and be any of the following:
- Permanently disabled
- A full-time student under the age of 24
- A child or other dependent under the age of 19
Please be aware that only one parent is allowed to claim this exemption, so it’s worth clarifying with your ex which of you is truly eligible. If both parents claim the exemption for the same dependent, it could give the IRS cause for concern.
Alimony deduction: Under the Tax Cuts and Jobs Act, alimony will no longer be deductible starting in 2019. However, for tax year 2018, individuals who pay alimony can deduct these payments on their tax returns. It’s wise to make sure the amount you claim as a deduction is accurate, as the IRS can easily check whether the amount you claim matches the amount your spouse reported as payment. Mis-matched numbers can raise a red flag.
There are a huge number of factors based on individual circumstance that can save you money on your tax return. Consulting with an experienced tax attorney can be extremely valuable in getting you all of the savings you deserve.