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Watch for tax issues in divorce

At this time of year, many of us are still struggling to get our taxes done. For those who went through a divorce last year, this can bring special considerations. Those who are planning to divorce in 2017 can take note.

Everyone who files taxes must select their marital status. Most people don't think twice about checking the applicable box on their tax returns, but for those who divorced in the previous year, this can be tricky. The IRS wants to know if you were married or divorced on the last day in the tax year. That is, if your divorce was finalized on Oct. 31, 2016, you may file as a single.

Your divorce can also affect how you claim your children on your tax returns. If your divorce decree named you as the parent with primary custody, you may be able to claim certain tax credits.

Parents who do not have primary custody are likely obligated to pay child support for their minor children. Paying parents cannot claim child support payments as an expense, and receiving parents do not have to claim child support payments as income. Note that this isn't the case with alimony. Ex-spouses who pay alimony may be able to deduct the payments, while those who receive alimony will have to report the payments as income.

Family law and tax law are both highly complicated, and tax laws change every year. It's important to discuss tax issues with your divorce lawyer. When done wisely, a divorce can leave you in a strong position as you start your new, independent life. You don't want to be held back by tax problems you could have easily avoided.


Source: Forbes, "Taxes and Divorce: 6 Tips for Women," Kerry Hannon, accessed March 28, 2017

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