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Don’t overlook tax implications in divorce

On Behalf of | Sep 1, 2021 | High Asset Divorce |

A Texas spouse who has a background in accounting may be confident that he or she knows what to do to achieve a fair settlement during property division proceedings in a family court. For the average person who does not have a specific background in finances, however, filing for divorce often has financial and tax-related implications that can have a significant impact on his or her future. There are several things to keep in mind regarding taxes, in particular when preparing for settlement proceedings.

Divorce means a spouse will lose marital tax benefits

Married couples typically receive tax breaks regarding deductions, income and even the tax bracket within which they have to file their returns. Once the court finalizes a divorce, however, the numbers may greatly change. It is critical that a concerned spouse clearly understands the implication filing for divorce may have on his or her taxes before heading to court.

Until there is a final decree, divorcing spouses are still legally married

It is understandable that a person who has filed for divorce might assume that he or she can file an individual tax return. However, if the court has not issued a final decree, then the pair of spouses in question are still legally married. This means that they should continue to file a joint return unless and until their divorce is finalized.

Tax implications in a divorce for Texas parents

When a Texas parent files for divorce, it is important that he or she understands how doing so may affect child-related issues on his or her tax returns. Questions to ask would include which parent is able to claim a “head of household” status or which should list children as dependents on a tax return. In a shared custody situation, the parent with the higher income is typically considered the custodial parent with regard to filing taxes. A family law attorney can review a particular case and make recommendations to help a concerned parent protect his or her financial interests in court.