How to file taxes as a co-parent?
Puja John, MBA, Staff Contributor
Who Can Claim Their Children As Dependents After A Divorce?
First, you need to understand the basic rules for filing taxes after divorce with kids. Generally, the custodial parent is the one who is eligible to claim any dependents. This can mean that the non-custodial parent is not eligible to claim the children on their taxes. To determine who is the custodial parent, you should consult your divorce agreement or speak to your lawyer. Additionally, keep in mind that the custodial parent may be entitled to certain tax breaks and deductions that the non-custodial parent is not.
Once you know who is the custodial parent in your situation, you should complete Form 8332. This form is used to verify that the custodial parent is the one claiming the deduction for the children. You will need to make sure that the non-custodial parent has signed this form. You should also make sure that you keep a copy of the form for your records. Depending on your state, the non-custodial parent may also need to sign state-specific forms.
If you and your former spouse both claim the children on your taxes, the IRS will generally consider the custodial parent’s return as valid and disregard the non-custodial parent’s return. Therefore, it is important that you make sure to accurately report your information to avoid potential penalties from the IRS.
If there is any income from the children, it is important to report this as well. Depending on the amount of income from the children, filing taxes after divorce with kids can become more complicated since the custodial parent may be required to file a separate return or pay taxes on the child’s income. Again, make sure that you accurately report all income to ensure that you are not subject to any penalties.
When filing taxes after divorce with kids, it is important to know the individual rules and regulations of each state. For instance, some states may require that both parents claim the same dependents, while other states might not have such a requirement. Additionally, some states may have alternative filing rules that can make the process of filing taxes after divorce with kids much more difficult.
If you are filing taxes after divorce with kids, it is recommended that you hire a certified tax professional to ensure that you are filing correctly. The tax professional will be able to assess your individual situation and help you determine exactly what the best course of action is, as well as ensure that you are filing correctly in order to avoid potential penalties from the IRS.
Expert Tips for Achieving a Smooth Tax Return
Going through a divorce is a difficult process. In addition to all the emotional and relationship challenges it brings, there are financial and logistical ones as well. Filing taxes after a divorce can be an additional source of stress because splitting up finances comes with a set of unique rules and uncertainties.
Here are expert tips and financial advisor quotes to help you feel more confident and informed about filing taxes after a divorce:
- Create a Separate Tax Return - “Most couples who go through a divorce will need to file separate tax returns in the year they split up. Even if they are still legally married by December 31, they are considered single taxpayers in the eyes of the IRS.” – Justin Lavelle, Certified Divorce Financial Analyst
- Assign Dependent Care - “When it comes to tax time after a divorce, it’s important that each former spouse agree on who can claim the dependent children. Usually this is the custodial parent, but depending on the specific circumstances, it could be something different.” – Michele Lerner, Licensed Marriage and Family Therapist
- Check Your Filing Status - “A common mistake people make when filing taxes after a divorce is forgetting to double-check their filing status. Depending on when the divorce was finalized, married couples may need to check their status and make sure they’re filing as the correct single or married couple.” – Jason Vitullo, Certified Divorce Financial Advisor
- Factor In Alimony - “Alimony is subject to income tax. The person paying alimony must report the alimony on their taxes, deduct it from their income, and the recipient must include it in their taxable income. A failure to report alimony could lead to an IRS audit or other tax consequences.” – Anupam Gupta, Financial Advisor
- Consider Divorce-Related Expenses - “Divorce-related legal and financial fees are usually deductible, so if you incurred any costs during the proceedings, include them on your return and claim them as deductions. These expenses may include the fee the court charged to finalize your agreement or process your forms.” – John Sonmez, Certified Financial Planner
- Update Your Information - “Make sure you update all your personal information, including your Social Security Number, mailing address, and banking information. This is especially important if you’ve recently moved, as any refunds you’re due will be sent to the wrong address.” – Kelvin Abraham, Certified Financial Planner
- Watch Out for Tricky Formulas - “Some formula-based credits, such as the earned income credit and child tax credit, are determined by some individual’s income. When couples are filing separately and one earns more than the other, it can be a challenge to figure out who qualifies for and must pay taxes on these credits.” – Karen Schaeffer, Certified Divorce Financial Analyst
- Submit the Right Forms - “The forms you use to file your taxes will depend on whether or not you are divorced before the end of the calendar year. If you are divorced by the end of the year, use the Single or Head of Household filing status forms. If you are still married at the end of the year, use the Married Filing Jointly form.” – Shannon McLay, Financial Planner
- Evaluate Your Ex’s Tax Breaks - “It’s important to determine which tax deductions and credits one spouse can take and claim before submitting the return. For example, if one spouse has the children living with them and they are taking the dependent exemption and child tax credit, the other spouse is not eligible to claim them.” – Devin Carroll, Certified Financial Planner
- Consolidate Records - “Keep all tax-related documents—such as year-end tax summaries, sales receipts, and charitable giving documents—that you used to prepare your return. Make sure to include all documents related to alimony and other income and deductions that are related to your divorce.” – Rachel Krohn, Certified Divorce Financial Analyst
Filing taxes after a divorce is an important part of your post-divorce financial planning. Taking the time to understand the process, assign dependent care, and gather the documents that are needed to prepare your return will help bring the process to a smoother conclusion.
10 Cheap Online Income Tax Filing Services
With tax season in full swing, filing your taxes can be tedious, expensive process. With so many online income tax filing services available, it can be difficult to choose the right one. Here is a list of 10 online income tax filing services that are inexpensive and reliable.
- H&R Block: H&R Block is one of the most popular online income tax filing services. It offers free filing for basic tax returns and deluxe packages for other forms, such as those with self-employment income, rental property and investments. Online plans start at $29.99.
- TaxAct: TaxAct is known for offering one of the most affordable options for filing income taxes. Generally, state forms are accessible for free, but some packages do come with additional charges. Online plans are available for $9.99 for federal and $19.99 for federal and state returns.
- TurboTax: If you’re an infrequent filer looking for the best bang for your buck, TurboTax might be the way to go. TurboTax’s pricing structure allows for a more targeted approach for more specific tax forms, such as if you’re a student or if you’re in the military. Their online plans start at $10.99 for federal and state returns.
- TaxSlayer: TaxSlayer bills itself as the “simplest way to do taxes”. It’s “Simple Federal” option is a very affordable tax-filing solution at just $17.00. It also offers a range of other services, like the ability to double-check tax returns and the option to pay employees online.
- FreeTaxUSA: FreeTaxUSA is a great option for digital do-it-yourselfers. It has a free federal filing plan and an even more affordable deluxe edition for only $6.99. It also offers audit support and other extras for an additional fee.
- TaxHawk: For those looking for a professional touch, TaxHawk offers an online assisted package for only $19.99. TaxHawk’s filing plans are apt for those with unique filing requirements, such as multiple businesses, stock options and self-employment income.
- eSmart Tax: eSmart Tax is a free online tax filing service with a customer-friendly price tag. It offers free federal filing only, with the option for an additional state filing fee. eSmart Tax’s federal filing plan is among the most affordable options available.
- Taxfyle: Taxfyle is an affordable and effective tax preparation service. Its rates start at a very reasonable $79 and plans are scalable to fit any filing situation. Taxfyle also offers an audit protection plan for added peace of mind.
- Tax Hawk Pro: Tax Hawk Pro offers an extensive list of advanced features for a great price. Its federal filing package is only $9.95 and state filing charges an additional $6.95. It also allows for an unlimited number of returns at no additional cost.
- TaxBrain: TaxBrain is one of the most comprehensive online tax filing services available. Prices start at $39.99 and its budget-friendly packages are perfect for those who don’t require the services of a professional. TaxBrain also offers a satisfaction guarantee.
No matter which online income tax filing service you choose, always make sure to double check your calculations before filing. Be sure to consult a certified tax professional, if needed. Doing your taxes can be daunting, but with these 10 affordable online income tax services, at least it won’t be expensive.
Filing taxes after divorce with kids can be confusing and complicated. However, by understanding the basics rules and regulations for filing taxes after divorce and securing the services of a certified tax professional, you can navigate this process and ensure that you file properly to avoid any penalties from the IRS.
This post is neither financial, health, legal, or personal advice nor a substitute for the advice offered by a professional. These are serious matters, and the help of a professional is recommended as it can impact your future.