As part of your divorce decree, you and your spouse must decide how to handle taxes now. Depending on your circumstances, your decree might also have to address future tax issues. If you are in the process of divorcing, here is what you need to remember regarding taxes.
Who Has Custody?
If you and your spouse share children, you not only have to consider who gets custody of them, but who gets to claim the children on future taxes. The custodial parent usually claims the children on his or her taxes, but it is possible for the non-custodial parent to claim the children if there is an agreement between the parents.
You and your spouse can set up whatever arrangement works best for both of you. For instance, you can agree to alternate claiming the children on taxes. You can also opt for one parent solely to claim the children. Whatever you decide, it is important that the agreement is put into the divorce decree. Without the written agreement, conflicts could arise in the future.
Are Legal Fees Deductible?
Depending on the cost of filing fees, attorney fees, and other divorce-related tasks, a divorce can sometimes be costly. It is because of this, some people wonder if their attorney's fees are deductible. Although some of the attorney's fees are not tax-deductible, some are.
For instance, any time that your attorney spends working to collect taxable income is considered tax deductible. If you are awarded alimony, it is paid in cash, and is part of the divorce decree, the fees associated with your attorney collecting the payment can be deducted.
Work with your attorney to get detailed records of his or her work so that you can determine what is and is not deductible.
What Is Your Filing Status?
Your filing status is determined solely based on your marital status on the last day of the year. If you and your spouse are still married when the year ends, even though you are going through a divorce, you have to file either "married, filing jointly" or "married, filing separately."
If you and your spouse do opt to file "married, filing jointly," you both are liable for any complications that result from filing. For instance, if there is an audit, both of you are responsible for handling it.
There are other tax considerations to make when divorcing. Work with your divorce attorney like one from Law office of Kristine A. Michael, P.C. to ensure that they are fully covered in your divorce decree.