If you have a high net worth, it is particularly important to understand how getting a divorce could affect your taxes. Various tax-related issues associated with ending your marriage might require careful consideration, and it is essential for you to review the unique details of your finances and divorce.
From your ability to claim dependents to your filing status, the divorce process could significantly impact the amount of taxes you owe and it is pivotal to plan ahead.
Divorce and your tax filing status
The Internal Revenue Service goes over how getting a divorce can affect your tax return. For starters, if you get divorced at any time during a certain tax year, your filing status becomes single for that year (unless you get married again in the same year or can file as head of household). Your filing status impacts your ability to qualify for some credits, your standard deduction and the tax you owe.
Other tax changes following divorce
If you change your name after divorce, it is crucial to register your name with the Social Security Administration and make sure that matches the name you provide on your tax return. For divorce agreements signed after 2019, spousal support is not deductible or taxable. If you have custody of your children, you could have the ability to file as head of household. However, you may not have the ability to claim your kids as dependents if you are a non-custodial parent.
If you have significant assets, it is particularly important to work through tax-related issues carefully and safeguard your interests after getting a divorce.