What are the tax implications of a divorce?

When filing taxes after a divorce, Virginia divorce law requires that if spouses where married on or before December 31st of the prior year, they must file as “married filing jointly” or “married filing separately.” It is important to discuss with your tax professional which filing status is best for you prior to filing. In general, filing as “married filing jointly” will result in lower taxes and credits, while filing as “married filing separately” will result in higher taxes and credits. It is important to note that in the case of filing as “married filing separately,” both spouses must file their own income tax returns and any tax credits or deductions must be split evenly between them. In addition to filing status, there are other implications related to a divorce that can have an impact on taxes. For example, alimony payments are taxable income for the receiving spouse, while the paying spouse can claim an alimony deduction. Additionally, any property or assets that are split in a divorce can result in capital gains taxes. Finally, it is important to note that if a couple is legally separated, taxes are still filed as “married filing jointly” or “married filing separately.” Additionally, if a couple is legally separated but has not yet obtained a divorce, either spouse can claim the children as dependents on their tax return. It is important to consult with a tax professional if you are going through a divorce to ensure that you understand the tax implications of your divorce in the state of Virginia.

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