The divorce process is full of complicated issues that must be carefully navigated. One aspect that you don’t hear as much about is how a divorce can affect how both spouses file their respective taxes. With that in mind, the family law experts at Oxendine Law are here to discuss some factors to keep in mind when considering how a divorce can affect your taxes.

How Divorce Affects Your Tax Filing Status

The first factor to consider is how you plan to file your taxes, either separate or jointly. We know this sounds odd considering the circumstance, but here in Georgia, your filing status is determined by your marital status on the last day of the tax year. If your divorce is finalized before December 31st, you may both file as single individuals. However, in cases where the divorce is still currently pending, you may have the option to file jointly with your spouse if that option is more financially optimal. Keep in mind that family law attorneys are not tax professionals. Therefore we highly recommend consulting with a tax professional to understand which filing status will help you maximize your tax benefits.

How Divorce Affects Your Tax Rate

It’s possible that your tax rate can change following a divorce. This is because the income limits for each tax bracket are lower for single filers when compared to couples filing jointly. There’s no guarantee that this will be the case depending on each spouse’s respective incomes after divorce, but it’s something to keep in mind. We also recommend that you submit a new W4 form with your employer following the conclusion of your divorce, a chore that many people forget in the aftermath of the divorce process.

How Divorce Affects Who Can Claim Children As Dependents

It is important to note that the Superior Court of Georgia does not have the authority to determine which parent is allowed to claim the tax dependency exemption for the children of the parties in a divorce, legitimation, or paternity action. That is dictated solely by the IRS Code. However, during settlement negotiations, parties often reach an agreement as to which parent will claim which children during any given tax year. This helps reduce confusion, conflict, and a “race to file” each year. We should note that pursuant to the current IRS Code, if one parent is deemed the primary physical custodian, or one parent has more than half of the years’ parenting time, by default that parent is entitled to the child dependency tax credit unless the parties agree otherwise. If the parties reach an agreement as to who will get the benefit of the child dependency tax credit in any given year and either party violates that agreement, the violating party may be held in contempt for his or her refusal to abide by a Court Order.

How Divorce Affects Your Alimony & Child Support

Alimony and child support payments can also be huge factors that can have significant tax implications. In Georgia, alimony payments are NOT taxable income for the spouse receiving them and also are NOT tax-deductible for the paying spouse. Child support payments cannot be taxed or deducted, either.

Both a divorce and tax season can be difficult to navigate on their own, especially without the help of experienced professionals on your side. At Oxendine Law, we take pride in being there for our clients and helping them each make the most informed and beneficial decisions for their needs. If you have any family law needs of your own, contact Oxendine Law at (770) 497-8688 today to schedule a consultation in-person, over the phone, or by video conference. Don’t forget to follow along with us on YouTube, Facebook and Instagram for additional family law tips, news, radio segments, and more.