There are many emotional aspects involved when an Oregon couple decides to end a marriage. In addition, several financial considerations come into play during divorce proceedings. One area that can be significantly affected in a divorce is the couple’s income tax return. Financial experts recommend taking a close look at the areas where divorce can have the most impact.
Filing status for those going through a divorce will change, depending on the date a divorce is final. Whether or not someone is still married on Dec. 31 determines if he or she should file for the entire year. If single or divorced parents file with head of the household status, they may realize some tax savings because of a wider tax bracket than for those who file as single.
Experts also stress the importance of understanding how to apply the various tax credit and deductions associated with having children. Divorced spouses should work together to determine how best to allocate tax breaks. Also, any child support or alimony payments can have a tax impact, based on whether the ex-spouse is paying or receiving the money. A divorce decree will specify the details, so it is critical to understand how these could affect after-tax income.
Typically, one of the larger financial questions is who will get the house after a divorce. Ex-spouses should discuss the tax implications whether they sell the house and split the proceeds or if one receives the home in the settlement. Finally, the experts note that couples with investments in 401(k) may need to establish a Qualified Domestic Relations Order to protect their retirement funds in a divorce.
It is important for Oregon residents going through a divorce to have someone knowledgeable in current tax laws to understand how they can influence financial decisions. An experienced family law attorney can provide valuable assistance to someone involved in divorce proceedings. A dedicated legal team will help their clients achieve the best possible outcome for their situation.
Source: pantagraph.com, “Here’s How Your Taxes Changed if You Just Got Divorced“, Dan Caplinger, March 2, 2017