Divorce represents a life-changing time. The end of a marriage brings uncertainty with the early months and years requiring significant adjustments in a new family dynamic.
Then comes tax preparation season.
The first post-divorce filing requires extra steps that start with securing a W-4 form that will notify the IRS of your new marital status and change withholdings in your paycheck. Further factors will also play a role. Tax returns become even more complex when factoring in alimony, child custody, and the possible sale of the family home.
However, a return to being single can have benefits when it comes to filing taxes that can put more money in your pocket while reducing the stress that comes with any aspect of divorce.
The last day of the tax year (December 31) may not be the date that your marriage was formally dissolved. If that’s the case, you can still file under the married or married filing separately categories, which could result in significant savings. Adding head of household provides a larger deduction and less onerous tax brackets.
Following the divorce becoming official, you can file as head of household provided that a dependent has been living with you for more than half a year, with you paying for more than fifty percent of the home’s upkeep.
Credits for kids
If you are the custodial parent, meaning that your kids live with you most of the year, you can claim a child tax credit or credit for other dependents for qualifying children. Should the custodial parent sign a waiver promising not to claim an exemption, the non-custodial parent can receive the credit, particularly financially beneficial if that parent’s income puts them in a higher tax bracket.
Children’s medical expenses
The ex-spouse who pays for the kids’ post-divorce medical bills can deduct the amount even if they are the non-custodial parent. The only requirement is that they meet specific threshold percentages.
The early days of divorce represent an adjustment period. While far too many former couples continue the battle during that time, ex-spouses who work together can reap the rewards, both personally and financially.