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Watch out for these tax changes after a divorce

When a marriage comes to an end, there are numerous issues that couples in Iowa or elsewhere in the country must address. While financial concerns such as asset distribution, child custody or spousal support are often discussed during the divorce process, dealing with potential tax consequences is not likely at the forefront in discussions. However, financial advisors recommend paying close attention to how taxes will change following a divorce.

First, the filing status should show that someone is unmarried if the divorce was final by the last day of the year. A person still may be able to file as head of household, only in a different bracket than when married. If a couple has children, decisions must be made regarding which spouse will claim the children as dependents on a tax return. Typically, the parent with whom the child resides is able to claim the dependent exemption.

There are tax implications for alimony, whether someone pays it or receives it. If a person pays it, the amount can be deducted on the tax return. On the other hand, the person receiving it should report it as income and pay the subsequent taxes. Finally, many couples utilize some tax breaks while preparing their joint returns. However, certain breaks, such as the child tax credit or the mortgage interest deduction, are only available to one person.

Trying to understand income taxes can be a daunting task, particularly when divorce is entered into the mix. It would be beneficial to contact an Iowa divorce attorney for help in going through the complex proceedings. An experienced lawyer will help protect an individual's interests and work toward achieving the best possible outcome in the process.

Source: fool.com, "Getting Divorced? Here Are 4 Ways Your Taxes Will Change", Wendy Connick, Sept. 24, 2017

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