Tax Advice for a Divorcing Couple
Going through divorce can be painful emotionally, but it can also lead to some pain in your pocketbook. When getting a divorce, it is important to consider the tax implications of doing so. Otherwise, you may find yourself with a big tax bill at the end of the year after filing for divorce.
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Timing is Everything
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If you and your spouse are open to working together to save money on your taxes, the timing of the divorce is important. If you and your spouse are not civil with one another, this may not be an option. When you and your spouse make about the same amount of money, divorcing before the end of the year can help you as you will file separately for the year. If one spouse earns the majority of the money for the couple, staying married through the beginning of the following year can be beneficial as it allows you to file as married one last year.
Dependents
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When you get divorced, you also have to think about who will claim children as dependents. If you have kids, the spouse who gets primary custody of the children will typically claim them on their tax return. If you share custody equally with your spouse, you and your spouse have the option of splitting up the dependents on your tax returns. Make sure that you and your spouse are on the same page about who is claiming your kids. Otherwise, you both may try to claim them, and it could lead to problems with the Internal Revenue Service.
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Tax Brackets
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When you file your taxes as an individual for the first time, you have to consider the difference between the tax brackets that you are used to. Tax bracket for married couples are higher than those for individuals. If you are used to filing in a particular tax bracket as a married couple, you may end up paying a higher tax rate when you become single. Check the tax tables to see which bracket you fall into.
Filing Your Taxes
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When you find yourself getting a divorce, you may need to consider getting help filing your taxes. In some couples, one person handles the majority of the financial issues including the taxes. If you are the spouse who did not handle financial matters, it makes sense to get some help when you have to start filing your own taxes. This could come in the form of buying a software program or paying someone to file your taxes for you.
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