When most people think about the major issues in a California divorce, they consider property distribution, alimony, child custody, and child support. However, few also consider the tax implications of divorce. There are many issues within a divorce settlement that can substantially affect your tax responsibilities, and an experienced divorce attorney knows how to minimize their impact. At Kearney Baker, our team of dedicated legal professionals is here to assist with this and all other matters related to your Pasadena divorce. To learn more, talk to our office today.
When You File Matters
When you finalize your divorce can have an impact on you and your spouse’s taxes in your final year of marriage. If you finalize your divorce after the new year, you and your former spouse can still file one last year of taxes jointly as a couple. This can result in substantial savings for you both while you each start your lives again separately. If your former spouse is unwilling to file jointly or the divorce is finalized before the end of the new year, you should review with a financial advisor how your tax filing will change and what to expect in regards to your return or what you owe.
Another significant tax implication involves the primary home and other real estate. For many people, the home holds a lot of emotion, meaning, and memories; however, some people do not consider the tax implications of divorce related to keeping the house. In addition to maintaining the property by paying for utilities and basic upkeep, a spouse must also be able to pay the property taxes on a single income. Anyone considering keeping the family home in a divorce should speak with a financial advisor first about whether this is feasible without the other spouse’s income.
Tax Consequences of Dependents
Finally, you need to consider the tax implications of dependents if you have minor children involved in your California divorce. The custodial parent, or parent that spends the most physical time with the child, can claim head of household status on their taxes. This means that you can claim earned income tax credit as well as tax credits for each child named as a dependent. If you are the noncustodial parent, you are not allowed to claim head of household status on your tax returns, nor are you able to claim your child as a dependent. Dependents can only be claimed on one parent’s taxes if they do not file jointly. While tax filing status may not be the main reason you wish to seek as much time as possible with your child after a divorce, it is something to keep in mind when determining the overall financial impact of your divorce on your taxes.
Curious about the Tax Implications of Divorce? Talk to Our Office Today.
Do you have concerns about the tax implications of your California divorce? If so, you need to speak with the knowledgeable Pasadena divorce attorneys at Kearney Baker today to learn more about your legal options. Call the office or contact us today to schedule a consultation of your case.