Tax Filing Options During a Divorce
While many people consider the more obvious issues in a Florida divorce, such as property distribution, spousal support, child custody, and child support, very few consider the tax implications of when their divorce is finalized. Depending on the circumstances in your case, you may be able to save considerably on your taxes during and after your divorce. At the law office of Blair H. Chan, III, our Tampa divorce attorneys understand how significant of an impact tax implications can be on a final divorce settlement and will work with you alongside a financial advisor to create the best possible tax outcome for your divorce.
When You Finalize a Divorce Matters
If possible, it is always beneficial from a tax perspective to finalize a divorce after the end of the year. By doing so, it allows you and your spouse one additional year of filing federal and state taxes jointly instead of separately. You can either file jointly or as married but filing separately. Typically, joint tax returns enjoy significantly better benefits than a separate filing so both you and your spouse can save money by filing together for one last year. However, you should only do so if you and your spouse are on good enough terms to manage filing together and if you trust your spouse to file without committing errors.
Determining the Head of Household
Another significant tax implication for federal and state filings is the determination of which spouse gets to claim the “head of household” moniker if you have minor children. Filing as the head of household provides significant benefits to the filer, and this parent gets to claim their child as a dependent. In most cases, the custodial parent who spends the majority of physical time with the child gets to claim head of household on future tax returns. While perhaps not the primary motivator in child custody negotiations, it is a benefit to keep in mind.
No More Deductions for Alimony Payments
One final consideration when filing taxes is the changes to the alimony deductions at the federal level. Under the new law, the payor of spousal support is no longer allowed to deduct those payments from their federal tax return. For those making alimony payments, especially if at a higher tax bracket, this may have drastic implications on the overall negotiation of the divorce settlement. Instead of taking the tax hit on alimony payments, it may make sense to do one large, lump sum payment or to negotiate a lesser share of the property distribution in exchange for no spousal support payments.
Call or Contact Our Office Now
If you would like to learn more about the potential tax filing implications of your impending Florida divorce and how our office can help, call or contact the law office of Blair H. Chan, III in Tampa today to schedule an initial consultation.