Taxes are often the furthest thing from your mind when going through a divorce. There are many more pressing matters to address, from your current finances to child custody arrangements.
However, with the new year approaching, tax season is not far away either. Additionally, taxes are an issue you must plan for when you divorce.
First, answer: When did you finalize your divorce?
Your marital status on December 31 of this year will affect your filing this coming April. As the Internal Revenue Service (IRS) indicates, if you finalize your divorce after December 31, 2022, then you will be considered married for this tax year. If you finalized your divorce earlier in 2022, then the IRS considers you unmarried for the whole tax year.
It is a requirement to list your marital status when filing your taxes, and the date you finalized your divorce will affect that. If you finalize your divorce after the end of 2022, you can generally select from two statuses when you file your taxes:
- Married Filing Jointly
- Married Filing Separately
The option you choose will depend on whether you and your ex-spouse wish to file a joint return one last time, or two separate returns. Regardless, it is essential to understand the details of how getting a divorce can impact your filing – and plan ahead.
Preparation will reduce stress
Tax season can already be stressful for many people. That is why it is important to prepare and understand the IRS’ rules, so you can avoid mistakes on your taxes. For example, there are many things you should consider, including, but not limited to:
- The timing of when you finalize your divorce
- Seeking help to manage retirement accounts, so you avoid tax consequences
- How you will handle claiming dependents, if you have kids
- Understanding North Carolina’s rules for filing
Remember, getting a divorce can impact nearly every aspect of your life. Understanding these effects and planning how to handle them is critical.