If you and your spouse have decided to split up, your income taxes are most likely one of the last things on your mind. After all, you have to decide how to divide your property in Indiana and possibly elsewhere, and agree on child support, alimony and other possible issues. However, you should pay attention to income taxes as they could change drastically during and after your divorce.
Changes in filing status
While undergoing divorce negotiations, you have a choice of how to file your return, either married filing jointly or married filing separately. In many cases, married filing jointly is still the better solution before your final decree. If you are divorced by Dec. 31 of the previous year, you will file either as a single person or as the head of the household, according to several factors.
If you have children, the tax situation becomes evening more confusing. Noncustodial parents cannot claim head of the household status, neither can that parent claim any of the available tax credits. Other issues you should pay attention to include:
-The timing of the sale of your home
-Retirement account transfers
-Responsibility for previous IRS taxes and penalties
Get sound financial advice
Property division can also affect your income taxes. Where you get your income or the expenses you must pay will also be affected by your divorce. While you may initially be concerned with the equitable division of property, you should remain aware of the tax implications of the assets you keep or grant to your spouse.
Working with a financial advisor during divorce negotiations and afterward is a good idea to ensure that you do not make mistakes on your income taxes. Taking the wrong deductions can have considerable consequences.