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How can divorce affect your taxes?

On Behalf of | Jul 27, 2020 | Family Law |

Most people understand that getting a divorce will have a financial impact upon their lives. However, they may not know exactly what that impact looks like. One area that people often overlook is their taxes, but it can make a significant difference. There are certain things that those getting a divorce in Kentucky need to consider with regard to their taxes.

Items to consider

First, the divorcing person may want to consider his or her filing status. Some people can still file jointly with their ex for the next tax year, and it may be in their best interest to do so.

However, if one person makes significantly less money than the other, it may be best for the individual with a higher income to file as “married filing separately.” If you have children and file separately, you will need to carefully consider which parent claims the children as dependents since child tax credits can change a person’s full tax picture.

When it comes to assets spouses own together, couples may also want to think about the tax implications that go along with each item. Since some assets are acquired with after-tax money and others will incur income tax in the future, this may greatly affect the overall value of your assets.

It may be best to split up both types of assets in a way that ensures a fair distribution of taxes. This is also something to consider for the spouse who ends up with the family home, as that person will want to consider the tax implications of selling it.

Furthermore, there are new guidelines for taxes regarding alimony or spousal support payments. The tax implications here are such that those getting a divorce will want to consult professionals before deciding on these payments. A certified professional accountant or financial advisor can help with this issue.

Individuals considering a divorce may also want to consult with an attorney. An experienced family law attorney can help you navigate the complexities of the divorce process. It may be well worth it for those looking to start fresh.