Does divorce have tax implications? What are the issues that you should be aware of? If for instance, you filed for a divorce and have finalized it on the 31st December of 2014; you will be considered as single for your 2014 Federal taxes. However, if you have finalized the divorce anytime during the first week of January 2015, your Federal taxes in 2014, you will be considered as still married. This is so because for tax purposes, it is at the end of the year that your marital status is determined. Nevertheless, there may be cases where you can be able to file for your tax as single if you and your spouse have already been separated. You will need to consult a tax professional regarding tax implications after divorce.
What Are The Tax Implications after Divorce?
Typically, the IRS will allow the children’s tax exemptions to the parent who stays with children the majority of time. The exemptions can also be divided differently using your child support order. Usually, the exemptions will be equally divided between the two parents since both of them supports their children in any way whether they live with the mother or with their father. The IRS, however, may require you to file your taxes using a specific form which outlines which between the parents will be entitled for specific exemptions.
Las Vegas Divorce Tax Implications Expert
While child support payments are not tax deductible, spousal support payments are, by transferring the tax burden to the spouse who receives the support. Child support covers only the specific parent’s share of the expenses that occurs while raising their children. This is no extra income to the other parent. Spousal support on the other hand is for additional income to the spouse so they could augment the cost of living with their children. But there could also be instances where the spousal support may not be deductible. For instance, the spousal support is not deductible when the spousal support was given in lump sum. There could some confusion relative to these matters it would be best to consult these with a Las Vegas divorce tax implications expert.
Additionally, there are no tax charged for whatever property that you have received when you divorced since you only receive your fair share of whatever property you actually co-own. And so, your divorce does not change the fact that whatever taxes that have been owed while you were still married will still be owed after your divorce. These taxes could include capital gains and the like. Likewise, it is also possible to transfer retirement accounts to the other spouse in the divorce without receiving any penalty or tax implication through Qualified Domestic Relations Order or QDRO.