Tax season isn’t fun for anyone, especially for newly divorced couples filing as single for the first time in a long while. However with the help of a Tennessee divorce lawyer, the tax implications of divorce don’t have to be so taxing.
Tax season is upon us and with March already halfway over the official IRS Tax filing deadline is quickly closing in. The months, weeks, days, hours and minutes leading up to the dreaded April 15th filing date are a stressful time indeed as people feverishly crunch numbers and scramble to get their paperwork together in time for the midnight deadline. What is a complex process for many is even more exacerbated by divorce.
Divorce can have a huge impact on your taxes as it changes the way you file your taxes as well as which exemptions and deductions you can claim. With that being said it’s extremely important that you understand what’s at stake so that you can prevent major complications from arising later in the game. Don’t make things harder for yourself than they have to be! An experienced Tennessee divorce lawyer can help simplify and clarify your post-divorce tax standing so you can stay sane, your bank account can rest soundly and the IRS can stay happy.
To file individually or jointly? That is the question.
The IRS wants to know your legal marital status as of the end of the year you’re filing for–in this case, if you were single or married as of December 31, 2012. In the case of divorce this can be a tricky one to answer. Even in the case that your divorce paperwork was filed before December 31st, if the divorce was not finalized by the year’s end then you’re still considered married for the year and will therefore file jointly. Of course there’s an exception to the rule. Separated parents who have paid more than half their housing costs for the year, lived apart from their spouse during the last six months of the tax year and whose dependent child lived with them for more than half of the year, have the ability to claim the favorable head of household status, entitling them to greater deductions. With that being said there are many financial advantages that come with declaring your taxes jointly such as the exclusion limits for capital gain on the sale of a principal residence.
As you can see picking the right filing status is key so if you have any uncertainty whatsoever don’t file hastily. It’s not a race to meet the April 15th deadline. In fact if you’re feeling the pressure, file for an extension and take the time you need to get your questions answered by a knowledgeable Tennessee divorce lawyer. After all, taking the extra time to make sure your taxes are filed the right way the first time will save you a lot of money when compared to the alternative.
And then there’s the children…
Not only does filing status become an issue for recently divorced or separated couples, but there’s the children to think about as well. The big question of who gets to claim exemptions for children can make a huge difference in your tax bill. Usually the custodial parent, the parent who cares for the children more than half the year, is the one who obtains the right to claim the children as dependents. However some divorced parents decide to exercise equal custody over their children. When this is the case, the right to claim the dependency exemption typically defaults to either the parent who pays child support or, in the case that no one does, the parent with the higher adjusted gross income. However, when it comes to child support, the IRS does not qualify the money being paid or received as a deductible. Though what they will take into account is qualifying childcare expenses and certain healthcare expenses for minors, and college tuition and school expenses for adults. That’s why it’s so important to be cognizant of the way you describe certain payments in your divorce agreement as each description can mean the difference of a nice lump sum of savings.
Overall, to ensure that recently divorced or divorcing couples get the most out of their tax returns, it is highly recommended that they seek out a Tennessee divorce attorney to help them sort through any questions and issues that may arise.
The attorneys of Cheatham, Palermo & Garrett, are experienced in the interpretation and application of Tennessee family laws and have been committed to protecting the financial and parental rights of men and women in Franklin and throughout Middle Tennessee for more than 30 years. They bring a wealth of legal knowledge and experience to each case they handle, providing their clients with skilled representation in the areas of Divorce, Child Custody, Child Support, Prenuptial Agreements, Qualified Domestic Relations Orders, Music/Intellectual Property, and Juvenile Court.