Divorce will have a big effect on your financial circumstances. You have to share your property and your debts with your ex. You have to pay for the divorce itself, which can be quite expensive. There may also be support obligations for your spouse or your children after the divorce.
With all of those immediate, practical concerns, people don’t always stop to think about what a divorce might mean for their income tax returns until they run into issues later. What impact will a divorce have on your income taxes?
You can file as the head of your household
Once you have finalized your divorce, you will be able to file a separate income tax return after filing for the year when you divorce. The following year, you will be the head of your own household, which means you will have the option of writing off certain expenses and claiming exemptions that you couldn’t before.
The custody arrangements can affect your taxes too
Having children that depend on you for financial and practical support offers certain tax benefits. You will pay less overall because you can claim for your children and receive a credit for them. A divorce involving young children will typically result in shared custody arrangements.
Your custody order or parenting plan likely establishes which parent gets to claim the children for income tax purposes. Trying to claim the children when you do not have the right to do so could result in tax evasion or fraud charges.
Learning about the various financial consequences of filing for divorce will make it easier for you to handle your own budget after a divorce.