When Michigan couples decide to end their marriages, the financial implications are often a major source of stress and detailed planning for the future. The end of a marriage can carry significant consequences for both divorcing partners far beyond the emotional disentanglements and the complications of custody. Indeed, a divorce can have long-term effects on the financial stability of both spouses and can impact a wide variety of accounts. One less-considered aspect of financial changes after divorce involves taxation.
Changes to income tax filing status after a divorce become effective immediately. For the year in which a divorce was finalized, the return must be filed by each divorcing partner as single filers. If the divorce was not yet finalized by the court but the parents have separated, a joint return is possible.
For parents going through a divorce, the issues can already be overwhelming when dealing with child custody and support. However, taxes are a factor here as well. There is a tax exemption available for each dependent child. By default, the custodial parent – the parent who has the child for the greater amount of time – is entitled to claim the exemption. However, the parents can agree in the divorce settlement to give the exemption to the other parent.
These are only a few of the complicated issues that can come up. The changing tax treatment of alimony and the potential effect of asset division during a divorce settlement are other concerns. Oakland County, Michigan, divorce attorneys can provide strong representation to a divorcing spouse on a range of matters and can provide clear, factual advice about taxation and other financial issues.