It is tax season. Whether you are dreading it (if you owe money) or celebrating (if you are getting a refund), your marital status at the end of the year plays a crucial role in determining your filing status. So if you were still married on December 31, and got divorced in early January, you can still file jointly, even though you are officially divorced by the time you actually file your taxes for the previous year. These are the protocols of our tax system.
If you are divorced and have a child, and live and file taxes in New Jersey, then you need to figure out who is claiming your child for tax purposes, are you claiming Head of Household or Single and who is providing health insurance for your children and how much it costs. These are factors that should be spelled out in your divorce agreement and incorporated into the child support calculation. These are also helpful factors to know when you are filing your taxes.
If these issues were not discussed during your divorce proceedings and are not addressed in your divorce agreement then you might be uncertain about how to handle them now that tax season is here. At Westfield Mediation, LLC, our divorce mediation process ensures that these matters are addressed thoughtfully and thoroughly. You will address how you are managing your taxes and discuss important tax-related questions, such as: What happens if you get audited in the future after your divorce is finalized for a time that you were married? Who claims the tax benefit for the mortgage interest and taxes on the house? Who gets to claim the children for tax purposes? How are you dealing with any taxes owed or refunds received?
Before making these important financial decisions, it may be helpful to consult with an accountant. Even in divorce, both parties tend to want to keep as much money as possible in their own pocket and out of Uncle Sam’s coffers. They want to minimize what each party may owe to the IRS and maximize any refunds. It might make sense for your co-parent to claim certain benefits and get the better tax break than you. It may be the most cost-effective move to agree to allow them to do so. Or perhaps you alternate each year. Or perhaps you make a decision to reevaluate each year depending on your incomes. There are a lot of options to consider, and you can do so during the process of divorce mediation. These are the productive conversations you have in divorce mediation to reach a fair and equitable divorce agreement that is the most fiscally responsible outcome for both parties. Taxes included!
