If you’re going through a divorce, you likely have a lot on your mind. You may not be thinking about your taxes and how they will be affected once your divorce is final. If you’re a North Carolina resident, here are some things you should know about your taxes post-divorce.
Determining your filing status
Depending on the status of your divorce as of Dec. 31 of the tax year, you’ll have a few filing options. If you’re separated at the end of the year but your divorce is not final, you can file your taxes as “married filing jointly” or “married filing separately.” Usually, it is more beneficial for you to file married filing jointly since you’ll have access to more tax credits that won’t be available if you file married filing separately. In 2021, the deductions for filing jointly were double the amount for filing separately. However, you may want to file separately if you’re trying to separate your finances as soon as you can.
Filing with dependents
If you and your ex have children, you have to determine how you’ll file for your children after the divorce. The noncustodial parent is not permitted to file as “head of household.” A parent is not permitted to claim the child on their taxes to receive the Earned Income Credit, child and dependent care credit or the American Opportunity Tax Credit if the children do not live with the parent.
The custodial parent will usually receive the credits listed above, but the custodial parent can sign IRS Form 8332 and allow the other parent to claim one or more children as dependents. The credit is around $2,000 per qualifying child. In recent years, the credit has been raised to $3,000 for children between the ages of 6 and 17 and $3,600 for children under the age of 6. Keeping these issues in mind during your divorce proceedings can help ensure that you come to a fair agreement.