The financial implications of divorce are many. While you are in the midst or in the immediate aftermath of divorce proceedings, you may have questions about what impacts your divorce may have on filing for your federal, state, and local taxes. Today, Union County divorce and family law attorney Edward Cooper will be addressing some of the concerns his clients commonly express. As always, it is recommended that you seek the services of a tax professional for before filing.
Call our office today today for a free and confidential consultation if you or a loved one has any questions or concerns regarding your divorce or associated issues including but not limited to child custody, child support, alimony, and division of assets.
Filing Taxes During Divorce Proceedings, Union County Divorce Attorney
Probably the most common question we receive regarding taxes and divorce is how to file before the divorce is finalized. Divorce proceedings may take weeks, months, or even potentially years to finalize. Therefore it is somewhat likely that for at least one tax cycle, you and your spouse will still be legally married at the end of the fiscal year despite having filed for divorce.
As long as your marriage is still legally in effect, you can opt to file either jointly or as an individual. The cut-off date is the end of the year. In other words, if your divorce was finalized on January 1st, 2018, you could still file your taxes in April 2018 jointly for the 2017 tax year. If you are unsure about the date your divorce was finalized, contact our Union County legal team for additional details.
Westfield Divorce Finances Lawyer Identifies Risks and Rewards of Filing Jointly
There are many potential benefits to filing jointly, but a divorce can certainly cause complications. Some of the advantages of filing jointly with a spouse include:
- Higher potential for deductions
- Easier qualification for child and dependent care tax credits
- Higher income thresholds (tax brackets) which may lead to lower tax rates for the same income
- Earned income tax credit
However, in the middle of a contentious divorce, you may have reason to believe your spouse is filing their taxes untruthfully and therefore illegally. If you are filing jointly, you may be held liable for these criminal wrongdoings by the IRS. Each case is unique, and only you, your spouse, and your tax representative should be making these decisions.
Elizabeth Child Support and Alimony Attorney Discusses Impact on Taxes
The other question our Elizabeth divorce attorney hears the most about taxes during a divorce is how payments like child support and alimony impact taxes. In the case of child custody payments, there are no tax benefits or penalties for either party. Child support is for the child’s best interest, and is meant to be a substitute for the payor actually making purchases to support his or her child. Therefore, the IRS has determined that it is not taxable nor deductible.
Alimony, on the other hand, is treated as a taxable source of income. This carries tax implications for both the payor and the payee. Recipients of alimony must pay taxes as if they were receiving that money as income, while payor may deduct alimony payments from their due taxes. All forms of alimony are considered taxable and tax deductible, including open duration alimony, limited duration alimony, temporary alimony, rehabilitative alimony, and reimbursement alimony.
Contact a Linden Divorce and Family Law Attorney Today
At The Law Offices of Edward S. Cooper, Esq., we believe in offering comprehensive legal service for our clients in local New Jersey communities including Linden, Westfield, Elizabeth, Plainfield, Union, Scotch Plains, and all of Union County. Attorney Cooper has been practicing divorce and family law in New Jersey for nearly three decades. Lean on the experience our firm has cultivated through successfully assisting clients navigate the divorce process. We are here to support your individual needs and concerns before, during, and after your divorce.
Contact us online or through our Linden office by calling (908) 481-4625 today for a free consultation with our legal team regarding your legal concerns surrounding your divorce or other family law matter.