There are serious implications that have to be considered at every stage of a divorce. Where will you live, who gets what property and custody of children. Tied to all of these decisions are the tax implications. These tax implications are often overlooked. In Virginia, it is especially important to consider the tax implications before and after the divorce.
Filing Status
Filing status is determined on December 31. If you choose to file a joint return, it is important to remember that you are both responsible for any errors. This responsibility is individual as well as collective. If you file separately, only a custodial parent can claim head of household status. Generally speaking, the non custodial parent will file as single. If they remarry within the year, they would be entitled to file as married.
Dependency Exemptions
Typically, only the custodial parent is allowed to claim a child as a dependency exemption. However, if there is a written release, the non-custodial parent may claim the exemption. IRS form 8332 is required for this release.
Reporting Joint Income
If you are filing separately, you will need to decide who is declaring what joint income. Income from joint brokerage accounts or sale of joint assets for instance. This can be allocated in any way you choose but must be allocated.
These are just some of the tax considerations you need to keep in mind when getting divorced in Virginia. As always, your lawyer is going to prove and important and valued advisor.
