Wednesday, December 03, 2014

Divorce and Taxes

The end of the year is fast approaching which means it's time to start thinking about how a divorce this year will affect your tax return. Most clients prefer to be divorced by the end of the year if at all possible so that they can ring in the New Year with a fresh start and also less tax liability. If you are not married on the last day of the year, then you can file single as if you were single throughout the enter year. If you have children, you need to be aware of who has the right to the claim the dependency exemption, head of household, and/or the earned income tax credit. Ask your CPA to explain which is best for your situation or if you're one of the millions that prepares your own return, go to the IRS website or read IRS publications that explain the differences and eligibility requirements. They have great resources.

I recommend reviewing the following:

IRS Publication 504: Divorced or Separated Individuals;

IRS Form 8832: Release of Claim to Exemption for Child of Divorced or Separated Parents;

Divorce and Taxes Can Be Complicated;

Taxes and Divorce, What You Need to Know.