Last December, just weeks before the start of the 2018 tax season, President Trump passed a new tax policy into law. Although the impact of this reform is mostly unknown, the Chicago Tribune reports that some changes may already be underway.
Illinois residents who are recently divorced probably have an entirely new tax situation as well as questions about the policy. For your first time filing taxes after divorce, you will have to consider the factors unique to your new circumstances.
Separate assets mean different taxes
After asset division in divorce, your taxes and financial situation might differ considerably from marriage. As such, you probably don’t know what to anticipate. Be ready to see differences from previous years now that you no longer share marital assets with your ex-spouse. You may also fall under a new filing status, so you should double-check whether you count as a single or otherwise during that tax year.
Alimony deductible unchanged – for now
You may have heard that the policy will affect the alimony deductible. However, this will not change divorce agreements signed during 2018. If you finalized divorce last year or even early this year, you do not need to worry about how your alimony payments might change.
The current alimony deductible law, which makes spousal support payments tax-free for the payer, is still in effect. For the receiver, alimony still counts as taxable income.
Parents must consider dependents
Co-parenting poses an interesting problem during tax season. Generally, the parent who has legal custody is able to write off their child as a dependant on their tax return. The other parent may still write off certain child-related expenses, however.
Taxes and divorce: both complicated
The worst mistake you can make during this time is to be ill-prepared. If you have questions about how divorce could complicate your finances, you should seek legal guidance from your attorney. Getting your taxes right can save money – and possibly the hassle of an audit.