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Kane County divorce lawyersA divorce can impact all areas of a person’s life, from physically separating to breaking apart emotionally and financially. Once the decision to divorce has been made, a couple may think the hard part is over. However, the legal process of ending a marriage raises many new queries that need to be resolved. For example, how will property and assets be divided? If children are involved, who will be awarded the allocation of parental responsibilities and who will pay child support? What are the tax implications, especially when it comes time to file your taxes? With tax season upon us, it is important to be prepared by considering the tax consequences when you get divorced in order to protect your financial future.   

Tax Implications of Divorce

Even if you or your spouse has filed the divorce petition, if you are still married as of December 31 of that given year, you have the option to file jointly for that year’s tax return. Until a divorce decree has officially been issued, you are married in the eyes of the law. However, once your divorce is final, each party has the option to claim as Single or Head of Household. The right choice for your situation will depend on your specific circumstances, and it is advisable that you speak with a tax professional.

If you have children together, the parent with the majority of the parental responsibility typically files as head of household, and the tax exemption or credit for the children usually goes to this parent. In some scenarios, parents can split tax exemptions using IRS form 8332, which means the custodial parent allows the other parent to claim a child on his or her taxes. Parents can also claim a tax credit for each dependent who is under the age of 17. There are also other credits for contributions to education and childcare.

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Elgin divorce attorneyIf you are going through a divorce, the first thing on your mind may not be taxes or financial issues; however, it is important to know that a divorce does have tax implications. Your filing status, tax consequences of maintenance payments, property transfers, and more are typically decided by your divorce judgment/order and affected by any new tax law changes.

A division of assets agreement should take into account any tax issues so there are no surprises later. If you are ending your marriage, a knowledgeable divorce attorney can help you prepare for any financial consequences.

Asset Division 

When a couple negotiates how to divide marital assets or property during a divorce, it is imperative to consider the areas that may have potential tax implications. Most marital property does not incur a tax liability if transferred, but you should consider the potential tax consequences of considerations such as:

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