Tax and Financial Impacts of Divorce
A divorce is always an emotional and volatile situation. Anger, hostility, and mistrust are very common especially in the early stages. It is important to be aware that the Internal Revenue Service is not going to be the least bit interested in these problems, nor are they going to care who is to blame. If there is ever a time to try to work together and set aside the disagreement, it is at tax time. It is very helpful to get some professional tax advice because the rules do change a bit during this time and there are provisions in the tax codes that address divorce.
The first area of consideration is filing status. It is possible to file a joint return and this method may result in a considerable savings. This is why it is important to try to maintain some lines of communication despite any bad feelings. Tax liability should be computed in both joint and separate filing status to determine which method is best. If one party files a joint return that is not signed by the other party and the other party does not file separately, the Doctrine of Tacit Consent might apply and the return will be accepted.
Another area of concern is the Head of Household status and exemptions for the care of dependent children. A lot of the normal tax tips are not going to be valid here and once again professional tax advice is going to be advisable. Related issues such as alimony and custody are going to continue to have tax implications for years after the divorce. Child support is not taxable, however, nor is it deductible.
It is possible to file taxes online in a normal manner after divorce. The key factor is to try to separate the emotional and personal issues from the financial issues. Try to remember that business is business, and especially in a marriage that has children, it is in the best interest of everyone to resolve tax issues fairly and in a manner that benefits everyone. It is very important to have all tax related issues and other financial matters that may have tax implications later covered clearly in any separation agreement. The final divorce settlement should address tax related issues also. When this turns out to be impossible, and this is sometimes the case, there is a provision of the tax code known as Innocent Spouse Relief. It is almost amusing to think of an innocent spouse in a divorce settlement, but there it is and you should understand how it might apply to you.
Natalie Aranda writes about finance and tax. It is possible to file taxes online in a normal manner after divorce. The key factor is to try to separate the emotional and personal issues from the financial issues. Try to remember that business is business, and especially in a marriage that has children, it is in the best interest of everyone to resolve tax issues fairly and in a manner that benefits everyone. Another area of concern is the Head of Household status and exemptions for the care of dependent children. A lot of the normal tax tips are not going to be valid here and once again professional tax advice is going to be advisable.
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