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Tax Tips for the Recently Divorced

We are only a few days away from the end of the year. What does that mean for people who have gotten divorced in 2018?

It means you have to get ready to file your tax returns for the year ending 2018 by April 15, 2019, or else extend it. Remember, just because you extend it, you still have to pay any tax that you owe by April 15, 2019.

If you got divorced in 2017, here are some items you need to think about for tax purposes:

  • Know what your filing status is for 2018. If you were divorced anytime in 2018 up to Dec. 31 of the year, you will be considered divorced the entire year.

  • Depending on your situation, you may need to file as single or head of household.

  • Review your settlement agreement to see who claims the children as exemptions. Remember that in 2018 there is no dollar amount allotted to the exemptions as in the past. The exemption is still important to you if you have minor children. The child tax credit is tied to the exemptions. Also the child tax credit went from $1,000 per child to $2,000 tax credit per child and the phase out amount has increased, so more parents will be able to take advantage of the child tax credit.

  • Form 8332 is a release of claim to exemption for child or children of divorced or separated parents. If form 8332 is required, make sure it is signed and attached to the tax return.

  • Check your withholdings on your W4. If you had too much withheld, you will get a refund, but you probably could have used that extra money during the year. If you did not have enough withheld, you will need to write a check to the IRS for the taxes.

  • If you received alimony or paid alimony to your ex-spouse, make sure you both agree on the amount paid during the year. For the person paying alimony, make sure you have your ex-spouse’s Social Security number, because it needs to be listed on your 1040 in order for you to get the deduction.  

  • If you sold any assets during the year, make sure you have the correct tax basis.

There are many other loose ends that need to come together before you pay your yearly dues to Uncle Sam. To get a comprehensive checklist, contact me.