North Carolina couples who are ending their marriage should give careful consideration to the financial impact a divorce can have. The effect it has on taxes may endure for a long time after the finalization of the divorce.
One issue to be aware of is the change in filing status. Individuals whose divorces are finalized by the last day of the year will have to file their taxes separately, using the single filing status or the head of household filing status if there are children involved. People who have separated, but whose divorce is not yet finalized by the last day of the year can file as married filing separately or married filing jointly.
There are additional tax considerations to keep in mind when there are children. The divorced couple will have to determine who will be allowed to claim the children as dependents and the accompanying tax exemptions. Custodial parents, or those parents with whom the child resides the majority of the year, are generally given the right to claim the dependent children. However, non-custodial parents can claim the dependent child exemptions if the custodial parent agrees to it. Parents who claim the dependent exemption are also eligible to claim the child credit. Parents who pay for the medical bills related to the children are allowed to deduct them. This is applicable to both custodial and non-custodial parents.
Income tax considerations are not usually at the forefront of divorce legal issues, but they can be important. A family law attorney can often explain other effects that a divorce can have on these matters.