How many of our readers have filed their income taxes yet? While there are many early birds in Ohio, others tend to wait until the last minute to file.
If you got divorced in 2015, your tax return might be dramatically affected. Here, as explained by the Motley Fool, are some of the ways getting divorce can change your tax bill.
Probably the most obvious way divorce alters your tax return is when you enter your marital status. The amount you owe changes based on whether you are married or not, but how it affects the bill depends on how you filed when you were still married. If you and your spouse filed jointly, the end of the “marriage penalty” might reduce your taxes. But if you and your spouse had big disparities in income and earned a marriage bonus as a result, your tax bill will probably go up.
Parents know that tax exemptions are available for having children. After divorce, child tax credits typically go to the custodial parent, though some credits can be traded to the non-custodial parent during property division negotiations. Some credits automatically go to the custodial parent.
It is common for divorcing couples to sell their home. Joint filers can deduct up to $500,000 from the sale of their personal home, but single taxpayers can only exclude up to $250,000. This works out the same if the house sells quickly after divorce, but complications can set in if the house stays on the market for a long time, or if one spouse keeps the house for years and later sells it.
In addition, it is important to remember that alimony is taxable income and deductible for the paying spouse, but child support has no impact on taxes either way.
A divorce attorney may not be able to do your taxes for you, but he or she can help you keep tax consequences in mind when negotiating a marital property settlement.