Tax Issues When Getting A Divorce In Virginia
The beginning of the year means you will soon begin receiving W-2 forms and end-of-year financial statements in the mail. While tax deadlines are still months down the road, if you are getting a divorce, you likely have some questions about how your divorce will impact your tax returns. Our Virginia divorce attorney explains common tax issues you need to be aware of.
Divorce-Related Issues That Could Impact Your Tax Return
The tax deadline for filing a 2022 tax return is April 18, 2023. Turbo Tax provides a list of other important dates you need to be aware of as well, such as timeframes for paying quarterly taxes. While this is a time of year many people dread, it can be particularly daunting if you have recently filed for a divorce. The following are tax-related issues in divorce, which could end up impacting your rights and the overall amount of taxes you are required to pay:
- Review prior year tax returns when filing for divorce: Prior year tax returns are a valuable tool in uncovering hidden assets.
- Changes in your tax filing status: Under Internal Revenue Service (IRS) guidelines, your marital status as of December 31, 2022 will determine whether you file a joint or separate return.
- Tax credits pertaining to children: It is vitally important to determine during divorce proceedings who is entitled to count children as a deductible and claim any child-related credits.
- Changes in income levels: Your income level is likely reduced due to divorce, putting you in a lower tax bracket and reducing the amount you must pay.
- Retirement benefits: You may be entitled to a portion of your spouse’s retirement benefits in divorce, which could impact tax liability.
Common Questions About Tax Returns and Divorce
Whether you file taxes on your own or rely on an accountant or tax preparation service, you need to be aware of potential issues and possible changes in this year’s filing due to your changed marital status. Common questions concerning taxes that we hear from clients who are getting a divorce in Virginia include:
Do I need to pay taxes on my marital settlement?
Generally, you do not have to pay taxes on your marital settlement unless you sold and made a profit from certain property or assets.
Are alimony payments taxable?
Under the Tax Cuts and Jobs Act of 2017, you no longer need to report alimony or pay taxes on it.
Must child support be reported?
Child support payments are not deductible by the payor or taxable from the payee
What if my former spouse and I owe taxes?
You can still be held liable for tax debts from your marriage. These need to be addressed during Loudoun County divorce proceedings.
Contact Our Divorce Attorney
At Schwartz Kalina, PLLC, we provide the trusted legal guidance you need when going through a divorce in Virginia and address important matters, including potential tax impacts. Call or contact us online and request a consultation today.