Every time something major happens in your life, you can expect some changes to happen on the tax front too. Many of those who are newly divorced miss valuable tax breaks because they are used to filing jointly. Today, we are discussing the tax breaks that are overlooked by those who are newly divorced.
Exemptions for the Kids
The custodial parent is able to claim all qualifying children as dependents on the tax return. However, the noncustodial parent can claim their child if the custodial parents signs the waiver stating that they will not claim the child. This could be ideal to do if the noncustodial parent is in a higher tax bracket.
Take a look at our Seattle CPA blog post “4 Tax Deductions That Can Save You Big Bucks”
If your divorce is final by the end of the year, you can claim Head of Household. This will allow you to receive a larger standard deduction. However, if you are still married at the end of the year you can always file married filing separately. It is recommend that you still file married filing jointly though since filing separately does not provide you with any tax benefits.
Usually, taxpayers have to have earned income to qualify to contribute to an IRA. However, some divorced people are an exception. The taxable alimony you receive can count as compensation when contribution to an IRA. Therefore, if you are at least 50 years of age, you can contribute up to $6,500.
When you get a divorce make, sure you do some research to see what tax breaks you might be overlooking.
We are a Seattle CPA firm serving clients in Shoreline and the greater Seattle area! Tax season is here! Get in touch with us at (425) 483-6600!