Divorce and Taxes: What You Should Know
Divorce is not an easy process to undertake. It’s one that impacts nearly every facet of your life, in fact, and that is perhaps most true when it comes to finances. In any divorce case there tend to be significant financial issues that can arise. These might take a variety of forms, including disputes regarding things like spousal support to the division of your marital property. As the dissolution of your marriage continues forward, then, it should come as no surprise that you might encounter significant financial struggles. Some of the most common of these are related to taxes and how you should file them as a result of your divorce.
Thanks to a new tax law set to go into effect on December 31st, 2018, divorcing couples could see some dramatic changes to the way they file taxes as well as spousal maintenance in the coming year. Let’s look at the change and how it stands to impact you.
Income Tax Returns
One of the main tax concerns that arises because of divorce is filing income tax. Married couples who file jointly are often eligible for tax deductions and breaks that are simply not available to single individuals. That means that, just as you must adjust to filing your tax return as an unmarried individual once more, you should also look at what deductions or tax breaks you have been receiving while married that you can no longer count upon now that you are divorced. Some of these might include:
- Child Tax Credit
- Mortgage Write-Offs
Spousal Maintenance and the New Tax Law
In addition to the issues described above with income tax returns, the new tax law will also impact the way in which spousal payments can be deducted. Before the change, it was possible for the spouse paying support to deduct the amount from their income on their tax return while the individual receiving the support had to include the money they received as income on their own tax return. Under the new tax law set to go into effect on December 31st, 2018, however, this process changes. Spouses paying support will no longer be able to count the payments as deductions and the individuals receiving them will no longer have to count them as income.
As you can see, the new tax law stands to significantly impact many individuals currently making and receiving spousal support payments. Some might find this change to be beneficial, however many individuals will find themselves confused and put out by the news.
At Abear Law Offices, we understand how you feel. We can work with you to help ensure you not only file your taxes correctly under this new law, but also that you are treated fairly throughout the divorce process itself. For more information, contact us today and speak to one of our experienced staff members!