How will divorce affect your taxes?

| Dec 18, 2018 | Divorce |

There are many things to think about when you get a divorce in California. While you may focus a lot on child custody and support payments, there are other things that could fall through the cracks. This does not mean they are not as important, though. One such thing is the tax consequences of getting a divorce. If you understand how a divorce affects your tax situation before your divorce is final, then you can make sure your settlement helps to offset those tax burdens.

One of the first ways divorce impacts your taxes, according to TaxAct, is who claims the children. Being able to claim your children gives you tax credits and lowers your tax liability. If you cannot claim the children, you may end up paying much more than usual. Typically, parenting plans outline who claims the children. A common plan is alternating the years you can claim them with one of you claiming this year, the other the next year and so on.

Another major concern is your filing status. Once you divorce, you can no longer file jointly. Being able to do so lowers your tax rate. You might be able to make some of that up by filing head of household, but that depends on your new living situation. You have to have a dependent living with you to claim this status. Otherwise, you have to file as single, which is a much higher tax bracket.

There may be other ways divorce impacts your taxes, so make sure to discuss this with your accountant so you know how to prepare in your divorce settlement. This information is for education and is not legal advice.