Are there any IRS issues I should be aware of following my Virginia divorce?
There are many tax issues that will arise when you go through a Virginia divorce. Your lawyer and your accountant can provide you with guidance regarding how to handle your taxes after a Virginia divorce, allowing you to make educated decisions to minimize the impact on your finances.
The big issues to consider when filing your taxes after a Virginia divorce are:
- filing status;
- spousal support; and
- exemptions for children.
Filing status is determined by your marital status on the last day of the year. If you are still legally married on Dec. 31, your choices are to file as Married – Jointly, or Married – Separately. If you are legally separated or divorced on Dec. 31, you can file as Head of Household or Single. Generally, the tax rate is most favorable to couples who file as Married – Jointly, so if you are able to cooperate with your spouse to file jointly, it could help you. Filing statuses listed from most advantageous to least are::
- married filing jointly;
- head of household;
- single; and
- married filing separately.
Virginia Spousal Support & Your Taxes After a Virginia Divorce
The award of Virginia spousal support after a Virginia divorce will affect your reportable income. As a recipient, spousal support is taxed as additional income. This includes support such as insurance and mortgage payments if your ex-husband is continuing to make those payments for you. If you are the payer of Virginia spousal support, you may deduct the amount from your taxes after a Virginia divorce.
Exemptions for Children When Filing Taxes After a Virginia Divorce
Either parent, but not both, can claim exemptions for children. Traditionally, it is assumed that the custodial parent will claim the children on their return. However, it is possible to transfer the exemption to the non-custodial parent by using IRS form 8332.
There is also a child care credit that the custodial parent can claim. This is 20% – 30% of the cost of work-related child care annually. There is a cap of $960. This deduction is available only to the custodial parent.
When you go through a Virginia divorce, consider the implication it can have on your taxes. Make informed decisions with the help of your attorney and your tax advisor.
Contacting a Virginia Divorce Attorney
There are very specific rules governing divorce in Virginia. At Hofheimer Family Law Firm we are committed to providing you with the experience and compassion you deserve and the successful results you need to move on with your life. Request a FREE copy of our guide, What Every Virginia Woman Should Know About Divorce, or reserve your seat at our monthly divorce seminar – 757-425-5200.