Tax Related Advice For Divorce
Divorce not only brings emotional miseries but also financial implications that are complicated in nature. Most of us know that divorce is about financial settlement in terms of alimony, division of property, and so on, but we donít know about the tax aspects of divorce. This article will give you tax related advice for divorce.
Tax is a legal issue. As a layman you would know only the basic details about tax implications of divorce. It is advisable to take consultations from a good CPA in order to get full idea about the tax implications on different aspects of divorce Ė division of property, alimony, child custody, and so on. Although lawyer can advice regarding tax issues in divorce but his or her information will definitely not be as complete as an accountant.
To get better idea on tax while divorce you can also browse internet and read books on taxation. Talking to friends who have undergone divorce can also help. You can also consult your family lawyer to know more details about taxation issues in divorce.
Tax advice for divorce:
The above-mentioned are some basic details related to tax that you must know while settling financial issues during divorce. It is important to consider tips to save tax during divorce because you can save a lot of money. If you do not pay attention to advice related to tax during divorce you can lose money in paying taxes more than you have benefited from your divorce.
- After the divorce takes place you both will become different entities for legal purposes and thus you will not be eligible for filing the tax returns jointly. Each of you will file the tax returns separately.
- If both of you are earning together which puts you in high tax bracket then it is advised that you get divorced before the year ends so that you get relief from marriage penalty.
- The spouse who pays alimony gets tax rebate, while the one who receives alimony has to pay tax on the amount. So the amount paid or received in alimony is going to affect the tax that you pay.
- Claim your child as dependent. Even if you are not the custodial parent of the child you can claim the child as financially dependant on you by the permission of the custodial parent. Although the custodial parent will be the guardian of the child for all practical purposes you can still claim tax benefits.
- If you pay the medical bills for your child or spouse, you can claim tax deduction on these medical expenses.
- You do not get any tax benefits for paying child support. And the money you receive as child support is not subjected to any tax.
- If you are sharing a joint property then both of your incomes from that property will be individually subjected for taxation.
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