How your income tax filing may change after a divorce
If you are in the midst of a divorce, the federal income tax filing deadline is probably the worst of your concerns. After all, there may be custody and parenting time issues that keep you up at night, and you may be locked in a bitter debate over who should leave the marriage with certain property.
If you have filed your tax return, congratulations; you will not have to see a tax return (or worry about it) until next year. But with your pending divorce, your tax preparation is likely to be different next year. This because if you are divorced by December 31, 2015, you will not be filing as a married person. With that, you should be aware of a few implications your divorce settlement may have on your tax return next year. This post will highlight a few.
More income to report – If you have to sell property (real property or securities) as a result of your divorce, you may have capital gains taxes that you may have to deal with next year. The same could be said if you have spousal maintenance to report. After all, alimony is deductible for the payor and is considered income to the payee.
The Child Tax Credit – If you are awarded sole physical custody or primary custody of a child born of the marriage, chances are that you will be able to claim the credit on your return next year.
Different exemption levels – As we alluded to earlier, if your divorce decree is finalized before the end of the year, you will be able to file as a single person next year. Keep in mind that the exemption levels for may of the things you can deduct may be lower.