Here are some common mistakes people make when filing taxes after a divorce. It can be confusing and frustrating, but you can avoid these mistakes if you do your homework and understand how the tax system works.
When filing taxes after a divorce, it’s easy to forget that there’s a lot of information to keep track of. Here are some mistakes people often make when filing taxes after a divorce.
As a new homeowner, it’s easy to overlook tax issues when buying your house. You’re excited about getting into your new home and planning to spend lots of time enjoying it with your family. But it’s important to remember to pay taxes on your newly acquired home because it’s part of your personal property. And if you’re not careful, you might be liable for taxes on your home even if you haven’t lived in it for more than one year. We’ll discuss tax issues for homeowners and offer suggestions for avoiding common mistakes when filing taxes after a divorce.
Not Updating Your Filing Status
Most people file taxes as single filers, meaning they only rub them themselves. But filing taxes as a single person is a mistake. You should file taxes as head of household if you and your spouse have a combined annual income of less than $150,000. If you’re starting, it’s easy to file taxes as a single person. You don’t need to worry about filing taxes as a head of household until you reach this threshold.
However, you should start updating your filing status if you’re already married. By doing so, you could be eligible for many tax breaks. The Child Tax Credit is only available to married parents or filing taxes as heads of household. It’s important to get a copy of your tax forms as soon as possible and contact the IRS if you need to file additional paperwork.
Neglecting to Report Alimony and Child Support Correctly
As a new homeowner, it’s easy to overlook tax issues when buying your house. You’re excited about getting into your new home and planning to spend lots of time enjoying it with your family. You’re excited about having more time with your kids, but you must still consider what you owe in taxes.
One of the most common errors people make is neglecting to correctly report alimony and child support. When you file your taxes, you must include the maintenance and child support you received. This is important because you may be eligible for deductions, credits, and exemptions depending on how much you paid in support.
To get started, you need to look up your state’s laws to see how you need to report alimony and child support. Some states require you to register monthly payments, while others only require a lump sum at the end of the year. Also, many states require you to write the total support you paid over the year. If you’re unsure how much you need to report, it’s a good idea to contact your state’s Department of Revenue to find out how you need to say it.
Incorrectly Claiming Dependents
You know that your ex-spouse doesn’t need to pay alimony, child support, and so on. But it might feel nice to get something back, right? Well, it can be costly.
It’s important to know exactly what you’re entitled to claim as dependents on your tax return.
Here are a few common mistakes to avoid when claiming dependents after a divorce:
You might be able to claim a child as a dependent but not a child’s mother or father. If you and your ex were married, you could still claim the child as a dependent. But if you weren’t married, you can’t.
You can’t claim your ex-spouse or former spouse as a dependent.
You can’t claim someone who isn’t a U.S. citizen as a dependent.
You can’t claim your former spouse or child as a dependent if they’re receiving any spousal or child support.
You can’t claim your child’s grandparent, step-grandparent, or step-grandchild as a dependent.
You can’t claim anyone who is not a full-time student as a dependent.
You can’t claim an adult child of your ex-spouse as a dependent.
You can’t claim your former spouse’s parents as dependents.
You can’t claim your former spouse’s siblings as dependents.
You can’t claim your ex-spouse’s parents as dependents.
You can’t claim your ex-spouse’s siblings as dependents.
You can’t claim your ex-spouse’s parents or siblings as dependents.
You must allocate shared expenses properly if you’re a new homeowner and have kids. You may think that this means splitting all of the costs evenly. It doesn’t. It would help if you gave fees based on how much time you spend with each child. You’ll want to start by making a list of all of the costs that you and your ex-spouse share. You’ll want to start by assigning an amount of money to each item on the list that corresponds to how much time you spend with that child.
If you both have a $600 car payment, then you should split the total of the car payment evenly. But what if you don’t have a car? What if you’re breaking the expenses evenly? It would help if you still allocated costs based on how much time you spend with each child.
If you spend an hour with each child daily, you should spend half of your income on their education and the other half on their food and healthcare. If you spend more time with one child than the other, you should allocate more money to that child.
Overlooking Potential Tax Deductions
You can claim many deductions from your income tax return if you’re a homeowner. The IRS offers plenty of advice on what you can claim, but you still might be surprised by some of the deductions you can claim.
Frequently Asked Questions Filing Taxes
Q: Can we file separately to claim the same amount of tax savings?
A: Yes, prove to the IRS that the two returns were filed separately for legitimate reasons.
Q: What are those legitimate reasons?
A: If a spouse has a higher taxable income, filing separately is more beneficial than combining.
Q: Do I need to file separate returns even if I am filing for joint status?
A: No. If a couple is filing separately, they each may file for their return and include any deductions taken. They may then combine their returns after filing.
Top Myths About Filing Taxes
- A divorce does not end the marriage.
- A person cannot file taxes after getting divorced.
- A person must file taxes within two years of getting a divorce.
- If you get divorced, you lose all of your money and assets.
- If you get divorced, you must give up your children.
Conclusion
Divorce can be messy, but it doesn’t have to be complicated. Most people can successfully navigate the tax system without too much trouble. But many people still get caught up in the paperwork and forget some important things.
