How Will Taxes Affect Me After Divorce?
If you are newly divorced, your tax filing status may change. Reach out to an experienced attorney to learn more about filing taxes for 2019 and how divorce may influence your returns.
When a person is married, he or she may benefit from certain tax benefits based solely on marital status; if a person gets divorced, those benefits may go away. Indeed, you may end up owing more taxes, or get a lower tax refund as a result of your single status. Or, if you are no longer the custodial parent, you may lose out on the child tax credit. Because filing for divorce can significantly affect your taxes, it is critical that you review your options and the current tax laws.
When Did You Get Divorced?
One of the first things to consider when filing taxes after divorce is when you got divorced. If you are filing taxes for 2019 and were still married on the very last day of the year (i.e. you are still married on December 31, 2019), then you will file as married for the 2019 year, even if your divorce is finalized on January 1, 2020. In other words, your marital status on the very last day of the year will control your filing status for the entire year. (Note, however, that if you are still married on December 31, you can file as “married, filing separately.”)
How Might Your Taxes Change if You are Single?
If you are filing as single, here is a look at how your recent divorce may affect your taxes for the 2019 tax year:
- Filing as head of household. Even though you are now divorced and may not be able to file as married, you may now qualify for the head of household deduction, which has increased by $350 for the 2019 tax year to a total of $18,350. In order to meet this requirement, you must have a dependent and you must have the right to claim your dependent.
- Child tax credit. Depending on whether or not you have custody of your child after a divorce, you may benefit from or lose out on the child tax credit. For the 2019 tax year, the child tax credit increased to $2,000 per child. However, you can only claim the credit if you are the custodial parent or your settlement agreement provides for you to take the credit, your child is a dependent under the age of 17, the child is a U.S. citizen, and the child lived with you for more than half of the year.
- If you made alimony payments throughout the 2019 tax year, then you can claim these payments as deductions on your 2019 tax returns. On the same hand, if you received alimony payments, you must count the payments as income.
Note that in addition to the above, asset transfers, home sales, transfer of retirement accounts, and more may all affect your tax filing status. Again, we strongly recommend meeting with a professional for help if you are newly divorced.
Our Monmouth New Jersey Lawyers Can Help
If you are thinking about divorce and are wondering how your taxes may be affected, reach out to our Monmouth New Jersey divorce lawyers for counsel. You can call us directly or send us a message at your convenience.