Illinois couples opting for divorce may be concerned about the financial impacts of ending a marriage. From asset and property division to spousal support, the monetary impact of divorce can be substantial and stressful. Each partner’s finances can experience severe changes, from splitting one household into two to dividing retirement funds. However, there is another major financial concern in a divorce: changes in tax filing can have a significant impact on each partner in the years to come.
Tax filings the year after a divorce is finalized must reflect the change of status. If the divorce was made final before December 31 of a given year, tax filings for that year should be done separately before April 15 of the next year. On the other hand, if a divorce is finalized in the new year or the parties are merely separated, they can continue to file a joint return or choose the option of married filing separately.
Tax implications are also important for divorcing couples who are parents. Only one parent can claim the tax exemption for a dependent child. Most of the time, the exemption is claimed by the primary custodial parent who has the child in their care for the largest percentage of time. However, the other parent could claim the exemption if the primary custody parent signs a waiver. Agreeing on tax exemptions for the children can be part of a divorce settlement.
There are also other issues related to taxation after divorce, including the handling of spousal support and the aftermath of asset transfers and division in the settlement. A family law attorney can provide strong representation in these matters as well as advice on dealing with the ongoing financial and taxation repercussions of a divorce.