Divorce isn’t just trying on former spouses’ emotions but can be financially taxing as well. Your tax filing status changes after your divorce. There are also other tax implications associated with splitting up that you need to be aware of before you negotiate a settlement in your case.
Your tax filing status will need to change when you divorce your spouse. If you’ve finalized your divorce by December 31st, then you’ll have to file your taxes independently instead of jointly with your former spouse. Filing individually instead of as a married couple can increase your tax burden.
You should take the time to speak with someone from your job’s human resources office after your divorce. You’ll want to update your withholdings on your Internal Revenue Service (IRS) Form W-4 when you do. It may impact your tax burden when you do this.
One thing that you’ll want to look into a bit more once you’ve divorced is whether you can qualify as head of household. You’ll want to look at your parenting decree to see who it states is the primary custodial parent. If that’s you, then you’ll want to be the first parent to file for this tax break. This could result in a significant tax deduction for you.
You may also be able to claim the Child and Dependent Care Credit if you’re the custodial parent for your kids, they’re younger than 13 and you pay for their child care while you’re at work. If you qualify for this credit, then you may be able to receive a tax break of $1,050 for a single child or $2,100 for two or more of them.
There are different tax implications associated with paying child or spousal support and receiving it. The spouse who’s responsible for paying child support or alimony isn’t allowed to take a tax deduction for doing so. The husband or wife that is entitled to alimony generally has the spousal support that they receive taxed much like any other income.
Negotiating child and spousal support is difficult. Things become even hairier if you throw taxes into the mix. An experienced attorney can help you sort through the pros and cons of making certain financial decisions in your New York divorce so that you make the best decisions for you and your family.