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Posted on in Divorce

Naperville divorce and taxes attorneyCouples will need to work out many issues during the divorce process, including child custody, division of assets, spousal maintenance, and/or child support payments. In addition to addressing the legal issues involved in dissolving the marriage, these decisions will also affect each party’s income taxes for that year and going forward. If you are considering divorce or have already begun the divorce process, it is important to understand how the decisions made will impact you when it is time to file your taxes. 

Filing Status

Married couples can report their income, exemptions, deductions, and credits on one tax return by selecting the “married filing jointly” status on their tax return. Couples will often pay less taxes if they file jointly instead of separately. If you are separating from your spouse, and the divorce has not been completed as of December 31st, you can still file your taxes as “married filing jointly” for that year. In the year in which the divorce decree is final, you will no longer have the option of filing jointly. If you and your significant other are still in an amicable relationship during the divorce process, you may wish to consult with a financial advisor to determine if you should take advantage of the ability to file jointly while you still can. 

Maintenance

Spousal maintenance, or alimony, is a common element of many divorce proceedings. For divorces completed prior to December 31, 2018, maintenance is deductible on a tax return for the payor and must be reported as taxable income for the payee. For divorces finalized on or after January 1, 2019, that “divorce subsidy” will no be longer available. 

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