Whether you’re filing for a contested or an uncontested divorce, there are many significant and life-changing decisions you need to make before the overall process can be finalized. You may have already discussed child custody, asset division, and financial support options with your spouse, but you probably haven’t considered how your divorce is going to affect your tax burden.
The first year tends to be the most difficult and confusing for recently separated spouses. To prepare you for the future, our New Port Richey divorce attorney has compiled a list of tax changes you may personally experience after your divorce.
When you file your income tax return, your filing status determines which tax benefits you receive, the amount you need to pay, and if you have any deductions. According to the IRS, your marital status is determined by whether or not you were legally married at the end of the last tax year. For example, if you divorced in November of 2016, you would file as a single payer in 2017. However, if you divorced in January of 2017, you would still need to file as “married” on your tax return.
In the past, divorced parents could claim qualifying children as their dependents on their tax returns. This allowed at least one spouse to enjoy lucrative tax credits and a reduction in taxable income. However, personal and dependent exemptions are suspended under the new Tax Cuts and Jobs Act (TCJA), which goes into effect this 2018 tax season.
As a counterbalance to this controversial move, the TCJA is making the child tax credit available to more families. Per the new law, the maximum child credit has been raised to $2,000 per qualifying child. As a bonus, up to $1,400 of this amount can be counted as refundable credit.
Alimony provides financial support to a lower-earning spouse who is transitioning to living on a single income. Usually, these monthly payments are deductible by the paying spouse, and viewed as taxable income for the receiving spouse. Except that spousal support options are also facing great changes under the TCJA. Going forward, any spousal support orders or alimony modifications are excluded from being considered deductible or taxable income.
Divorce can be incredibly complicated even before taking tax considerations into account. The Trump Administrations laws also make it difficult to keep track of accurate information online because so many divorce and tax standards have become outdated.
If you have concerns about your divorce or how it can affect your taxes, contact Dale L. Bernstein, Chartered Law Office. We have over 35 years of legal experience and are well-versed in changing Florida laws.
Contact Dale L. Bernstein, Chartered Law Office at (727) 312-1112 to schedule a consultation.