One of the biggest consequences of a divorce is the change in tax exemptions and status. Ironically, this is also one of the least-understood and least-considered aspects of a divorce. The Men’s Legal Center can help you understand the tax implications of your divorce and make decisions based on what is financially feasible for both parents.
Tax Consequences 101: Exemptions
When filling out a tax return, exemptions are the name of the game. If you have dependents, you can claim them on your taxes, significantly lowering your tax burden and, in some cases, qualifying you as head of household with all the tax benefits that come with that status.
However, it is important that you define who is responsible for the dependents and, therefore, who can claim them on the tax return. While both parents cannot claim children, in cases where there is more than one child in the family it is not uncommon for parents to agree to “split” the deduction, with one parent claiming one child and one parent claiming the other. This is more common in situations in which the parents share custody about equally. In cases in which one parent takes the majority of the time and expense for raising the children, that parent generally claims the children as deductions.
Another important tax benefit is being able to deduct the interest from a family mortgage payment. If one partner assumes the mortgage, he or she is able to claim this deduction. However, if the mortgage payment is split or if the partner who is not living in the home pays the mortgage, that person may be able to take the deduction.
Finally, other deductions such as medical expenses and other costs may be assigned to one person or another depending on what the agreement states. Most divorcing partners agree that each partner will take the deductions that apply to him or her, but sometimes other arrangements must be made.
It is very important to assign tax exemptions and deductions fairly during the divorce process. If you ignore this important aspect of your divorce, you may find yourself in court again at a later date or losing the opportunity to take these important credits.
The Men’s Legal Center is set up to help you work through these questions and problems. Contact us today for information on how we can represent you and help you protect your interests as well as those of your children in any divorce situation.