October 16, 2023
Filing taxes is stressful for everyone, even those who are in a strong financial position or those who will receive a tax refund that will grant them temporary relief from financial hardship. The financial inquisition is the least stressful part of a divorce, and handing over your hard-earned money to your ex-spouse hurts even more than handing it over to the IRS. Filing taxes while your divorce case is pending or in the first year after your divorce becomes final is an unpleasant experience indeed, but, like having your wisdom teeth removed, it only happens once, and next year you will ease into a new normal at tax time. A Chicago divorce lawyer can answer your questions about finances and taxes during and after divorce.
The first time you filed taxes after marrying your spouse, it was a delight to check the “married filing jointly” box on your tax forms. Now that you are divorced, that same question fills you with trepidation. It turns out that whether you should file jointly or separately depends on when you are separated. Many couples choose to file for divorce in early January, even if they knew months earlier that their marriage was ending. The reason for this is to make a clean break between tax years. In other words, if you filed for divorce at the beginning of 2023, you can still file jointly with your spouse for your 2022 taxes. You may dread having to file taxes with someone who is currently trying to manipulate, bully, and browbeat you out of your fair share of the marital property, but if necessary, you and your spouse can communicate with each other through your lawyers and your accountant.
Financial issues related to co-parenting are often contentious, and one of the most contentious ones is which parent should claim the children as dependents on their tax returns. It is up to each couple to decide this individually; you can work it out during mediation. Often, the parent whose financial situation would result in the biggest tax savings claims the children. Some couples even agree to claim the children on their tax forms in alternating years.
For some couples, selling the marital home is the most practical option, as neither spouse would be able to afford it or qualify for a refinance without the other spouse’s contributions. Selling the marital home and splitting the proceeds can help you make a new start financially after your divorce, but if your house is very valuable and you owned it for a long time, you may need to pay capital gains taxes. Deciding how to divide responsibility for the capital gains tax is not always straightforward, but your lawyers can help you find a fair solution.
A Chicago family law attorney can help you get through your first tax season after divorce. Contact Women’s Divorce & Family Law Group in Chicago, Illinois, to discuss your case.