Now is the perfect time of year to think about getting through another tax season after a divorce.
Here are a few tips to make your tax prep easier, and hopefully help you
avoid paying higher taxes than necessary and potential penalties:
1. Make sure to choose the right federal tax filing status-whether you were married or single on December 31, 2012.
If your divorce was finalized by the end of the year, file as a single person (or, if you had a child and qualify, head of household status- that offers more tax advantages than single filing). If you’re not divorced yet, then you have two options: married filing jointly or married filing separately. Usually it’s better to go with jointly, since it will lower your taxes.
2. If allowed, claim an exemption on your child.
You must have been named the custodial parent in your divorce. If you were,
you may able to take the dependent exemption for your child if you were
divorced (or even legally separated) last year, allowing for your taxes
to be lowered.
Being named as the custodial parent would also allow you to claim the child care tax credit and education tax credits, if eligible.
3. Don’t get upset about the tax rules for child support.
Unfortunately, neither you nor your ex can deduct child support payments you made. Keep in mind- child support isn’t taxed as income, either.
4. Avoid confusion with alimony tax rules.
If you received alimony or money each month then you’ll most likely owe taxes on that income. However, your ex can deduct the payments, unless you continued to share a residence after the divorce.
5. Consider using alimony you received last year to fund a 2012 Individual Retirement Account.
Generally speaking, “earned income” is needed to contribute to an IRA and, lucky for you, alimony qualifies. 2012 IRA contributions can be made until April 15.
6. Learn the recent tax law and understand how you could be affected in your 2013 taxes.
Take the time to learn how the new law could affect your divorce settlement. Negotiating accordingly could save you major taxes.
Faced With A Divorce?
If you find yourself faced with divorce and are in need of professional advice, please call the Top Divorce Lawyers in San Diego – The Edmunds Law Firm at (855) 625-9553 or fill out their contact form. Our compassionate attorneys are experienced and skilled in divorce cases, with over 33 years of combined experience in the state of California.