Who is responsible for paying income taxes during the divorce?
The simple answer is – check with your accountant or tax advisor.
The tax rules change frequently and having your CPA advise on what you need to do in your situation is best.
The last thing you want – after a tough divorce – is the IRS banging on your door!
Generally speaking, each person is responsible for their own taxes.
This means you are responsible for your taxes and your spouse is responsible for their taxes.
Now, how you file (married, single, head of household, etc., and joint or separate) will be dependent on your specific situation at the time of filing.
Who claims the children as tax deductions after divorce or separation?
Claiming a dependent child on your tax return can provide or increase certain breaks, including dependent or child tax credits, the Earned Income Tax Credit, and possibly a more favorable filing status.
With regard to children, again – generally speaking – the right to claim the children as a dependent is governed by IRS rules.
The rules say only one parent can claim a child in any given year for tax purposes.
Two kids – great – in most cases – each parent claims one.
What about if you have one kid or three kids – who gets to claim them then?
In most cases, your divorce decree will spell this out – alternate years or have one parent claim all if most advantageous but pay a sum of money to the other – or some other agreed-upon arrangement.
If there is no written agreement – the IRS says – whoever the child lives with the most (the custodial parent) gets to claim provided the child lived with the parent more than half the year.
But there are ways for the noncustodial parent to claim a qualifying child.
If the child spends equal time between both parents, then the parent with the highest adjusted gross income may claim the dependent.
What happens if divorced parents both claim a child as a dependent?
When both parents claim the child, ONLY return filed first will be accepted by the IRS.
Because of this, it is always best to talk to your divorce attorney and have how the taxes will be handled clearly spelled out in your divorce decree.