One often overlooked aspect of filing for divorce in Pasadena is the effect ending your marriage has on your tax liability. As tax season approaches, it's time to consider how you'll prepare to file your return.
The most important thing to remember about your tax return is that you still have the option of preparing a joint return if you are separated, but not yet legally divorced. Your marital status as of December 31 determines your status for the entire year.
If you have children, you need to agree on who will claim the kids. This $3,950 per child deduction is only available to one parent. Typically, the parent who had custody of the children for more than half the year can claim them. However, you and your ex are free to make other arrangements if you wish. For example, if the person who normally would be able to claim the children makes enough that they qualify to pay the Alternative Minimum Tax, it may be more beneficial to have the lower earning parent take the deduction.
Medical expenses for the children can be claimed by the parent who paid the bills, even if that parent is not entitled to claim the child as a dependent on his or her tax return. Unfortunately, education related child credits, such as the American Opportunity or Lifetime Learning College Credit, go to the parent who claims the dependent exemption, regardless of who actually paid the bill.
Mortgage interest deductions go to the spouse who was awarded ownership of the family home in the divorce, regardless of who is currently living in the property. If the home is jointly owned, the deduction is split equally between the parties.
Alimony is a tax deduction for the person making the payments and countable as taxable income for the recipient. Child support is neither a tax deduction for the paying parent nor taxable income for the recipient.
When in doubt about the tax consequences of your divorce, it's best to seek the assistance of a qualified accountant. Seeking expert advice now can help you avoid significant penalties later.
How Can We Help?
If you are in need of legal representation for your divorce, please call our office at (626) 683-8113 or email us at info@PasadenaLawOffice.com. Our team of experienced Pasadena family law attorneys are eager to advocate for your interests throughout the settlement process.