Need of the hour: Tax deductions for recently divorced!

It’s not as easy as they show in Holiday flicks. Being separated or awaiting divorce, an awkward thing ever happens to someone. Still, such people deserve to get their benefits. Recently divorced? Then they’ve got their tax deductions as a little relief. It takes time for the emotional healings, but when it comes to filing for divorce or separation taxes, it should be taken into the most important practical account -- future!

Firstly, filing the status, a la carte!

Unlike marriage, divorced couple doesn’t have to wait for each other. Once their divorce is declared, they’re privileged to file their status for tax benefits separately. It has two stages of discomfort. First one being joint tax returns – the couple is married a year ago; they’re going for divorce filing status together.

It’s not a light thing to handle finance with one’s Ex, for one last time. But there’s one choice left, which could be nothing else than ‘married filing separately’!

Alimony fees and Form 1040

She’s divorced, but she pays an alimony fee. This is considered taxable. She is going to schedule it with Form 1040. After all, she’s eligible to claim for tax credits, along with the rest of the arrears. Deductions are applicable, only if it goes beyond 2% of her income.

Child support and dependency exemptions

Thumb rule of divorce tax credit: Not both the parents would be able to claim dependency exemption at the same time. However, custodial parent is the one, who is eligible for dependency exemption. Checking out the divorce agreement for “family support” would be helpful in itemizing every expense.

Checking out legal fees

Expenses listed under legal fees are taxable and it should be itemized according to an attorney’s advice. Firstly, comes the itemized deductions, and then comes miscellaneous. Scrutinizing filing status is too important, when it comes to taking an advantage of divorce tax credits.

(Picture source: dnaindia)