The 2020 deadline for income taxes switched from April 15 to July 15 because of the coronavirus pandemic. This means that many have still not filed their tax return, perhaps because they focused on filing for divorce. Individual tax advice from a tax attorney is recommended, as the following comments are general in nature and should not be considered “tax advice”.
Now with the new tax deadline once again approaching, here are some questions for divorcing or newly divorced couples to answer when determining the best approach to file their tax returns:
What is the marital status?
Couples are still married in the IRS’s eyes if the divorce was not final by December 31, 2019. If the divorce was finalized on December 31 or before, the individual is considered unmarried for the whole year and must either file as a single person or as the head of a household, if applicable.
Does a joint return save money?
A combined filing makes the couple eligible for higher standard deductions. The standard deduction per spouse is $12,200 for either spouse, but $24,400, if filing a joint return, can reduce the amount if one spouse earns a lot more than the other or does not work outside the home.
Who claims the children?
Either parent can claim the children as dependents, or the parents can split them (for example, one for each parent if there are two kids). Regardless of the arrangement, parents cannot claim the same child, so this should be negotiated during the divorce to avoid future fines or misunderstandings.
Can the parent deduct child support payments?
The 2018 Tax Cut and Jobs Act removed this option.
Can the parent deduct alimony/spousal support payments?
Under the recent laws, alimony is no longer deductible, nor does the spouse have to claim it as income if the divorce is finalized after December 31, 2018. Couples with older divorce decrees may modify their divorce to accommodate the new tax laws if it is advantageous.
Each divorce is different
Those with complicated finances often need tax expert financial experts, and legal experts to get their affairs in order during a divorce. A Board-certified Family Law specialist expert attorney in Collin County, Dallas County, Denton County Midland County, Ector County, and surrounding areas of Texas can also be extremely helpful in determining a fair and equitable division of assets.
As part of this arrangement, these legal professionals can also help negotiate how parents choose to file their tax returns in the future with input from experienced tax attorneys and other tax professionals in your jurisdiction.