Couples in Pennsylvania who go through a divorce typically expect to endure some emotional turmoil and mental anguish. However, there are some long-term financial ramifications associated with divorce that couples must keep in mind. Arguably the most important aspect of managing your finances as a newly single person involves knowing how to file your taxes correctly.
Adjusting your filing status
If you’ve been filing your taxes as a married person, you must change your filing status to single. However, the filing status that you use for your first income tax filing after your divorce depends on when your divorce becomes final.
You cannot legally file a joint tax return if your divorce becomes official on or before December 31. If the new year begins before your divorce becomes final, the IRS will allow you to file a joint income tax return that year.
Updating your W-4
Most hourly and salary employees have a W-4 on file with their employer that tells the employer how much money to hold out of their regular paychecks for tax purposes. After your divorce, you can change how much money they hold out, which will be helpful as you will probably need more money to survive. Employers typically allow employees to update their W-4s at any time of the year.
Claiming your children on your taxes
Claiming dependents on your taxes creates significant savings on your annual income tax returns. However, only one parent can claim their children each year. The custodial parent is the only one who can legally claim the children on their taxes. Custodial parents can allow non-custodial parents to claim their children by filling out and signing Form 8332. In those cases, the non-custodial parent must attach the signed form to his or her tax return.
The tax implications of divorce go far beyond the first year you file your taxes as a divorced individual. Understanding how to file your taxes after your divorce ensures that you follow IRS guidelines.