Baltimore & Towson Lawyer Discusses The Tax Aspects Of Divorce in Maryland
Divorcing couples can experience a variety of challenges as they go through the process of not only separating themselves physically and emotionally, but also separating their financial lives. Some individuals are aware of the immediate issues that can stem from divorce, such as a loss of financial security that they may have enjoyed through the benefit of having combined incomes to cover household expenses. However, your Baltimore and Towson divorce lawyer will tell you that divorcing individuals should also keep in mind that there can be a variety of tax consequences.
Child Support and Alimony Payments
Generally speaking, divorcing parties have a certain amount of control over the taxability of child support and alimony payments. Although individuals who pay child support will not be permitted to deduct such payments and individuals who receive those payments will not be required to include those amounts as income, alimony payments are deductible by the payor and includible as income by the recipient. That being the case, if there is a great difference in the parties' tax brackets, your Baltimore and Towson divorce lawyer might suggest structuring those payments (if both alimony and child support payments are being paid).
Filing Your Taxes
Something else that divorcing couples should take into account is the timing of the divorce. If the divorce process begins and ends in the same year, that should not be problematic. However, if the process starts in one year and ends in the next, the parties will need to consider their filing statuses. Typically, there are two choices: "married filing separately" and joint filings. Additionally, if the parties have been living separately for at least six months, one party might be able to qualify as head of household. If the parties decide to file a joint return, they can always craft an agreement with respect to sharing any savings derived from such a filing.
With respect to dependency exemptions, the Internal Revenue Service notes that custodial parents are entitled to those exemptions, unless they are willing to sign a release. If the custodial parent does agree to sign a release, the non-custodial parent must attach it to his or her tax return for any year in which the exemption is claimed.
Please note that unless an individual remarries, if he or she is the noncustodial parent, that individual will be considered to be "single" for tax purposes and the custodial parent might be deemed "head of household. Keep in mind, however, if there is more than one child, both of the parties might be able to use the "head of household" designation, depending on the situation. A tax payer's marital status will be determined as of December 31.
While it is true that divorce is quite often an unpleasant experience, the challenges that divorce can bring can be lessened if the parties take time to consider and balance the tax considerations. If you have questions about how your divorce might affect your tax filing, contact a Baltimore and Towson divorce lawyer at the Law Offices of Amar Weisman, LLC today.
Call (410) 321-4994 For a Free Consultation
Call The Law Offices of Amar S. Weisman at (410) 321-4994 to schedule a Free Consultation. The Purpose of the consultation is to determine whether you want to retain this law firm as your Baltimore County & Harford County Family Lawyer. If you do wish to proceed, then you must pay a retainer. See Our Policy on Fees and Costs. The family firm is located next to The Circuit Court for Baltimore County, at 1018 Dulaney Valley Road, Towson, MD 21204.