Tax Tips

How a Divorce Can Affect Your Taxes?

A divorce can be a very difficult thing. While you are hurting emotionally, there is also a chance that you will be hurting financially, especially when it comes to your taxes. We spoke with Greg Mahaffey, a trusted tax professional at Levy & Associates to understand how he helps his clients handle divorce and taxes.

When you have a less than amicable divorce situation, there is a lot of finger-pointing and lots of accusations. It can get quite hairy, sometimes. That is why, whenever I have to help out a divorced couple who both owe the taxes, I do not see them together.  I make sure that I schedule them on different days, and I make sure not to tell one spouse what is going on with the other one.

If we are representing both, which usually we don’t do because that might be considered a conflict of interest, it can get quite messy.   What happens when one spouse files married-filing ‘separate’ and the other spouse doesn’t, or they think they are not going to?  It can get very messy and very expensive.  When it comes to who gets to claim the kids, that is why everything is handled by divorce attorneys and by divorce courts as they will determine who gets to claim what.  That is usually put down on a divorce decree.  If it is not on a divorce decree the IRS usually makes the determination of who do the kids live with most of the time and that is the person that gets it, unless the other spouse fills out the form that is needed to give away those exemptions to the other spouse.

How to Handle your Taxes When Newly Divorced

The first thing is to file a new W-4 at work because your tax status is whatever your marriage status was on December 31st of that year.  So, if you got divorced on December 1st, 2017, for 2017 you can either file as ‘single’, or ‘head of household’ if you have children.  If you are married as of December 31st you have two options:  Married filing separate, or married filing joint. When in doubt go ‘single zero’.  That way they take out the maximum they can take out and then get yourself a refund and avoid the hassles.  Avoid having to pay someone like us to come and fix the mess.  Either you can pay it now, or you can pay it later.  If you pay it later, it is going to be a lot more expensive because not only would you have to pay the penalties, but if it is big enough and you can’t do it yourself, you will have to pay a professional to help you out.  Make sure you look at the divorce decree to see who gets to claim the kids.  If you get the kids and they live with your spouse, make sure that you get the 8332-tax form from the spouse.

When in doubt, IRS has publications on their website that are free.   Look at the publications and print them out.  Read them here.

If you are recently divorced, or going through a divorce, and feel that you need a tax professional to help work out your taxes, contact Levy & Associates. Contact us at 1-800-TAX-LEVY or visit our website to learn more.

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There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.