Income tax implications following a divorce

The end of a marriage can come with major emotional and practical difficulties for California couples. However, the financial impacts can be some of the most important. For example, filing income taxes can be much different following a divorce.

Changes to income tax status go into effect right away after a divorce has been finalized, and they apply to the entire year in which the divorce was confirmed. Every year, income tax returns are due by April 15 of the following year. For the year the divorce was finalized, both former spouses must submit their returns as single filers. On the other hand, if the divorce was not finalized before December 31 of that year, divorcing spouses must file that year's returns as married, either jointly or as married filing separately.

There are additional tax issues that arise for parents following divorce. For example, they'll need to consider the tax exemption available for each dependent child. After divorce, only one parent can claim this exemption. By default, this is the custodial parent who spends more time with the child. However, the parents can agree through the divorce settlement to give the exemption to the other parent, or they can divide the exemptions for multiple children between themselves.

Of course, there are many more issues that can involve taxation following divorce. For example, potential taxes on the sale or transfer of assets pursuant to a divorce settlement or the handling of spousal support can be major concerns, especially in a high-asset divorce. A family law attorney can provide guidance on the tax aspects of divorce as well as standard matters like child custody, spousal support and asset division.

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