Implication Of Divorce On Taxes Lawyers Serving Clients In Roselle, Carol Stream, And Lombard

Married couples generally enjoy a favored tax status, as they are able to file jointly. Filing a joint tax return generally allows a couple to take greater tax deductions, while enjoying a lower tax rate. Claiming child dependents on your taxes also provides valuable deductions. A divorce can have a significant impact on the amount of taxes you owe.

At The Stogsdill Law Firm, P.C., we are knowledgeable about the tax consequences of getting a divorce. Our attorneys will counsel you on the best strategies to minimize these consequences both during your divorce proceedings, and after your divorce is finalized. We factor tax strategies into property settlement negotiations to make sure our clients' interests are protected.

Divorce And Child Dependency In DuPage County

Claiming a child as a dependent on your taxes may translate into an exemption of thousands of dollars from your income taxes. When there are multiple children in the family, such exemptions can be very significant. Only one divorced parent may claim a child as a dependent, however, that parent must meet the requirements to prove child dependency. These requirements include:

  • Maintaining physical custody of the child more than 50 percent of the year
  • The child must be less than 19 years old at the end of the year, or the child must be less than 24 years old and a full-time student

Which spouse is permitted to take the child dependency exemption is a matter that generally can be negotiated as part of a divorce settlement.

Alimony And Child Support Taxation

Alimony (now known as maintenance) and child support payments are handled differently by the IRS. Alimony is tax deductible for the paying spouse, and it is taxed on the recipient. Conversely, child support is not tax deductible for the paying spouse, and it is not taxed to the recipient. In some cases, it can be beneficial from a tax perspective to lump alimony and child support payments together as unallocated support. This allows the couple to mutually agree to treat the support payments as alimony so that the paying spouse can enjoy the tax deduction, which may result in a lower tax bracket. The amount of unallocated support is generally adjusted so that even after taxes, the recipient receives more than if he or she were to receive child support or alimony separately.

If you are considering filing for divorce or are already involved in divorce proceedings and are concerned about tax consequences, contact us at 630-462-9500 to schedule a consultation. We will discuss your specific circumstances and answer any questions you may have. From our offices in Wheaton, IL, we work with clients throughout northern Illinois, including DuPage County and the surrounding areas.