In life, there are several things that you can do which will both impact and change your life. Getting married is one of those biggest decisions that you can make within your life. Because of that, you must choose wisely on who you married. Once you get married, you cannot simply get a divorce without going through the legal tape.
Even if you both think a divorce is mutual and get an online divorce, there are still things you must worry about for the most part. Should the divorce be quick and easy, it does not necessarily mean it will be painless. Depending on the situation, especially with children and valuable property involved, there is still one subject that you and soon-to-be ex spouse will have to deal with: taxes.
While getting married affects your taxes, getting divorced really affects your taxes. There are several online sources that one can refer to. One such source would be the website for TurboTax. The website has one section that gives information of what you have to think about. TurboTax does give services in helping one deal with taxes prior, during, and after the divorce.
On the website called Tax Box in regards to divorce and taxes, there are factors that both spouses need to consider. It explains that divorces impact finances in three methods: property, costs associated with children (if there are children), and the possibility of alimony pay. All factors will affect your taxes.
In regards to property, it is not limited to your home. This can be everything including the kitchen sink. That means, anything can and will be considered property such as: cash accounts, health savings, medical savings, retirement accounts, stock, bonds, mutual funds, vehicles, pets, video game consoles, electronic equipment, and so forth. Also, other real property will be affected during the division of properties between spouses.
With regards to property, you do not have to record any movement of cash on any of it due to transfer via the divorce. If the recipient of the property sells it, then s/he will have to pay taxes on the profit or earn a deduction on the loss. This is explained according to Tax Box.
TurboTax goes more in-depth in regards to sale of property. If the home gets sold due to a divorce, the gains might get taxed. The first $250,000 can avoid getting taxed if you lived in the home two years out of the last five. If either you or the other spouse owned the residence and used it as the primary home, up to $500,000 can be excluded.
Depending on the financial situation, you or your soon-to-be ex-spouse may be ordered by the judge. This is in case if one spouse makes much more money than the other spouse. It is considered that support should continue even if the marriage is over. According to TurboTax, you can make tax deductions for alimony payments if you are the one that is giving the money. On the flip-side, the one that receives alimony money must pay income taxes. TurboTax does add that it is reversed in regards to child support. The person that pays child support cannot make a tax deduction while the person that receives child support does not pay income taxes.
Tax Box also explains that if you paid fees to help you collect alimony, then those fees can be deducted from your taxes.
For the children, each child is considered to be at least $3,650 each according to Tax Box. But, perhaps the amount might have increased over the years. In regards, only one parent will be able to claim the children. The custodial parent gets to write children off as tax deductions. On the flip-side, the children stay with the parent they spent most nights with. If the number of nights are equal, the children stay with the parent with the higher amount of income.
If you still pay for your child’s medical expenses, according to TurboTax, you can still make tax deductions. That is even if your ex-spouse still has custody of the children.
Divorce itself can get very messy. There are plenty of divorces that do not end on a good note. However, that is just the start. Dealing with the taxes can and will get more painful than the divorce.