Virginia couples who are thinking about separating should understand that a divorce has several tax implications. For instance, it may be necessary for an individual to change his or her filing status from married to single. If a couple has merely separated, they could file taxes jointly or separate. Those who pay or receive alimony may need to acknowledge this on an income tax return.
The alimony receiver must pay taxes on the payments while the payer gets a deduction. However, these roles will be reversed for divorces filed after 2019 due to the new tax reform law. It is important to note that neither of these deduction guidelines apply for child support payments. Capital gains and other taxes may need to be paid when assets are divided or sold in a divorce. In many cases, the amount each person pays will be determined in the divorce settlement.
Parents may have gotten used to claiming their children as dependents on their tax returns. When a couple divorces, only one parent is allowed to claim a child as a dependent on their tax return. In many cases, the custodial parent is the one who claims the child. However, the noncustodial parent could claim a child if the custodial parent signs a waiver. A child’s medical bills can also qualify for a tax deduction.
Property division, alimony and child custody matters are often top priorities for those who have just gotten a divorce. However, it’s important to consider the tax implications of any decision. An attorney could help a spouse through the divorce process.