Tax Issues That You Need To Know In A Divorce
Getting divorced? Be prepared to do your own taxes from now on. One of the many headaches of individuals who have recently gone through a divorce is coping with tax issues. Until now you must have filed your taxes as a couple but now the rules will change. You will realize that there are certain issues which you need to understand before you can file your taxes. Here are some of them which you need to look at the next time you file your taxes.
- Your filing status
Before you file your tax return, determine your marital status at the end of the current financial year or the year of your divorce. The three types of filing status are married filing jointly, married filing separately and Head of Household. Take the opinion and advice of a lawyer to understand what the different status means and what it holds for you financially.
- Child tax exemption
Child support is taxable in California and you can file for a child tax exemption. However, whether you will get the exemption or not will depend on how many children you have. Usually it is one exemption for one child. Also, only one of you can avail the exemption.
- Taxes and refunds due
While making your settlement agreement, be sure to include how you are going to handle the tax and refunds. It has often happened that one spouse who ignored the agreement, ended up paying most of the dues. Make sure that it is clearly mentioned how much percentage you have to pay.
Tax issues are tricky and if you are not aware of what you’re dealing with, the loses can be huge. Hire a good lawyer and understand the different tax issues which you need to deal with after your divorce. Make a settlement agreement with your spouse and clearly determine how much you need to pay as part of the tax. It should include child support and alimony as well. Having a clear understanding of the California tax issues during divorce, you will be able to make a better decision.
Getting divorced in California can be complicated. Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.
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