Monday, April 09, 2012

Family Law / Divorce and Taxes

It’s tax season again! I thought it would be nice to briefly cover an article that talks about the effects of taxes on divorce.

Tax season is already a stressful time of year for many people and divorce only adds to the complexity. One of the first issues people face when they are separated, but not yet divorced, is their filing status. According to the article, for tax purposes, a person's status as of December 31 of the tax year determines their status. Those who are not divorced by December 31 must continue to either check “married filing jointly” or “married filing separately”.

One important tip that the article recommends is that, the parties should consider filing a joint return even if there is relationship strife. They will reap more tax benefits than they would filing married but separate.

There are many deductions and credits that are available to filing a joint return versus a separate return. If a couple are married filing separately, they are unable to take any education credits, take advantage of a deduction that working parents receive for child care costs, or deduct student loan interest.

Another important factor to consider is the current economy in some areas of the country. Many divorcing couples are forced to continue living together because they cannot afford to live on their own. But if separated couples do not live in the same home and have not lived together for at least six months, the spouse who has the children primarily living with them can file his or her income tax return as head of household.

Another common issue that comes up is determining which parent will get to use the children as exemptions. According to the article, no matter what the divorce decree says, if the non-custodial parent plans to use any of the children as exemptions, the custodial parent must provide the non-custodial parent a signed Form 8332 authorizing them to claim a child on their federal income taxes. In many cases, the parents alternate the years in which they claim the children as dependants.

Spousal support and child support can be another hot issue during the divorce process. It is important to know that child support is not tax deductible for the payer and is not taxable income for the parent receiving child support. But, spousal support is tax deductible for the payer and is treated as taxable income for the party receiving spousal support.

If there are any legal questions you may have, I encourage you to, please contact my San Jose Divorce Lawyers office. My San Jose Family Lawyer offices assists many people who are going through family law related issues. We have many Affordable San Jose Divorce Lawyer solutions for many different budgets. We help many individuals through this very chaotic period in their life. Proudly serving the following cities, Fremont, Milpitas, Los Gatos, Cupertino, Mountain View, and Santa Clara.