Colorado couples who decide to divorce are often concerned primarily about an array of emotional and personal factors that led to the end of a marriage. However, divorce is a financial and legal arrangement that can have significant consequences for many aspects of a person’s life. While people are often aware of the impact of property division, they may not consider how their income taxes might be affected by the choice to divorce. Of course, people will have to file as single rather than married after the divorce is final.
However, for parents in particular, divorce can have other effects on how people handle their taxes. Only one parent each year can claim a particular child as a dependent. The advantages can be significant, including access to Head of Household filing status as well as tax credits. These credits include the Child Tax Credit, Child and Dependent Care Tax Credit and the Earned Income Tax Credit.
Many parents determine who will be able to claim the child as a dependent during divorce negotiations. Some may favor time with the child, while others may favor financial support. However, if the parents do not come to an agreement and both attempt to claim the child, the IRS will reject the return filed second. It can be a cumbersome, complicated process to have the agency determine who is most qualified for the credit, relying on a range of factors and inviting scrutiny of their returns.
When people decide to divorce, an array of otherwise-unexpected issues may emerge. Greenwood Village, Colorado, divorce attorneys can help a client to achieve a fair settlement on various matters, including property division, child custody and spousal support.