As you begin the process of completing your taxes, it’s important to stay on top of all the tax law changes so you don’t make any costly mistakes. If you were divorced in 2019, filing your taxes for the first time as a divorced individual can be intimidating. There were also several new laws that specifically impact this situation as well. The following will help you navigate through your taxes to ensure you complete them accurately for your new status.
Alimony Paid Is Not Deductible
In the past, if you were ordered to pay alimony to your former spouse, you were able to write that amount off as a tax deduction, reducing your earned income and creating a lower tax burden. This is no longer the case. The new laws that were enacted for the 2019 tax year state any alimony payments that were made after December 31, 2018, are no longer considered tax deductible. This stipulation was created to ensure the individual who makes the higher income would be appropriately taxed, rather than placing that tax burden on an individual who already has a limited income.
Received Alimony Is Not Taxed
On the reverse side, if you are paid alimony by your former spouse, you will no longer be required to claim it as income. This means you won’t be taxed on it. Instead, the person who paid the alimony wlil be responsible for carrying the tax burden. After all, alimony is typically set in place to ensure an individual is able to maintain a reasonable standard of living after a divorce. If these individuals are then taxed on that money, it can create an undue burden on them.
Child Tax Deductions Have Changed
The new tax law also changes how children are handled when it comes to filing taxes. A child tax credit is now used to offset taxes owed for parents who claim the child as a dependent, rather than making children an exemption. Only one parent will be able to claim a child as a dependent. This is usually the parent with whom the child has lived a greater percentage of the year. However, it’s important to review your final divorce decree regarding this issue because many couples choose alternative arrangements for claiming a child, such as dividing the children between parents if there is more than one child or alternating claiming years.
There are a few other things to keep in mind when it comes to filing your taxes for the first time as a divorced individual. First and foremost, if your separate or divorce was finalized at any time in 2019, you will need to file your taxes as a single individual or head of household if you are claiming dependents. It doesn’t matter how late in the year your divorce was finalized. Also, child support can never be considered a deduction on your taxes. It is also not taxable income for the individual who receives it.
Understanding tax law changes can be complicated, but it’s important to make sure you know what you’re doing so you don’t end up misfiling your taxes and experiencing problems. If you’re unsure what you need to do to file your taxes as a divorced individual, it’s often best to work with an experienced tax professional who can guide you through the process and ensure you don’t make any mistakes that could cost you financially in the long run.