Divorce and Taxes – Expect Changes
Undoubtedly, taxation and divorce are among the most unpleasant aspects of life. If you combine both of them, you might be shocked to learn how difficult the consequences are.
Many people believe that since they pay child support, they are entitled to subtract the amount from their income tax-free or claim the child as a dependent. You can also hire the best mediators who are well experienced in handling divorce accounting and tax issues.
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The custodial parent – the parent who is the primary caregiver for the child for the majority of the time, according to tax laws is entitled to declare their child's name as a dependent and get the deduction in proportion, unless the parents decide otherwise. Additionally, the payment of child support doesn't count as income tax-deductible and is not tax-deductible by the parent who provides the amount.
Parents are not able to share a single deduction. This is why it's crucial that parents discuss and decide who will be eligible to claim their child as dependents. In most cases, if there are two children each parent can declare one child as a dependent and they can alternate seasons if there's just one child or a varying number of children.
Additionally, the parent who is custodial can declare themselves as the head of household, which is a better situation than filing as an individual.
Maintenance payments, sometimes called alimony, are intended to provide support for spouses. The person who pays maintenance gets an exemption from tax on the amount paid, while the recipient is taxed for the support. Tax money can be saved when income is transferred from a tax bracket to a less tax-paying bracket.
