Even if you and your ex have already split and settled on every aspect of the divorce settlement, you’ll likely still need to watch how its terms might affect your taxes for the next several years. Depending on when you and your ex legally divorced, you may even still be able to file jointly to retain married tax benefits for one last year in Illinois. It can also be beneficial to consider how the various terms of a divorce settlement may affect future taxes, as in some situations it could affect any decisions that are made.
For instance, it can be helpful to go ahead and determine who gets to claim what on his or her tax return. Both children and medical bills are commonly claimed, but only one individual may claim these following the conclusion of a divorce. Who gets to claim the children can be addressed in the settlement, and some couples even choose to each claim one child in alternate years. Additionally, any medical bills for a child can be claimed, but this is typically only done by the parent who is actually responsible for paying the debt. Nevertheless, it is still a good idea to specifically outline this in a settlement.
If you and your ex can agree on working together, it’s also sometimes possible to file a final joint tax return. Couples who were still married on Dec. 31 of the previous year can file jointly if they wish, but they still retain the option to file separately as all other couples do. Depending on what each party is claiming, certain filing statuses can reap a larger return, so carefully evaluating how it may affect your return is advisable.
With so many other factors like child custody and division of assets already subject to consideration in a divorce, it may be easy to leave tax considerations by the wayside. While some Illinois couples may perceive tax season as too far in the future to really affect their divorce, the terms of the divorce — including alimony and support — can directly affect taxes. Before any settlement is agreed to, taking the time to look forward to tax season can be beneficial to both parties involved.
Source: Forbes, “Getting Divorced? 8 Things You Must Know About Taxes“, Emma Johnson, Jan. 19, 2015