Divorce is a stressful and confusing time that brings many changes into your life. One of those changes involves filing taxes. The options available to you during your divorce are slightly different from those available after your divorce, and it is necessary to make the distinction.
A marriage is a financial contract with monetary implications. A divorce seeks to dissolve that financial contract and comes with changes. There is information to keep in mind during and after a divorce in Colorado.
Appropriately Determine Your Tax Filing Status
Individuals undergoing the divorce process but not legally divorced before the end of the year can choose Married Filing Jointly, Married Filing Separately, or Head of Household. When your divorce is final by December 31st, you can file Single or Head of Household.
Each filing status has different deduction thresholds and requirements for filing. In 2022, the standard deduction for married couples filing jointly is $25,900. For single taxpayers and married individuals filing separately, the tax deduction is $12,950.
The standard deduction is $19,400 for heads of households. The higher deduction makes this status coveted by some, but to file as Head of Household, you must meet the following requirements:
- File a separate tax return from your ex-spouse
- Pay more than half the cost of maintaining your house for the tax year
- Live more than half the year with a dependent child
Alimony or Maintenance Taxes in Colorado
Alimony (or maintenance in Colorado) has changed significantly during the past few years. The Tax Cuts and Jobs Act came into effect on January 1, 2019. It stipulates that alimony is no longer tax-deductible for the payor, nor taxable income for the payee. Because of the Tax Cuts and Jobs act, you cannot claim alimony if you pay it or count maintenance as income if you receive it.
Claiming Qualifying Children During Divorce
During a divorce in Colorado, the custodial parent is entitled to claim the child. Only one parent can claim a qualifying child as a dependent. The dependent must meet the following requirements to be a qualifying child:
- Under the age of 19 (or age 24 for full-time students) unless there is a disability
- Related to the taxpayer
- Lives with the taxpayer for a majority of the year
Claiming Children After Divorce in Colorado
Colorado tax law states that the parent claiming a child as a dependent for federal tax purposes may receive a fully-refundable child tax credit and child and dependent care tax credit.
The custodial parent can sign a written declaration that gives the other parent the right to claim the child. A legal professional can help create a tax strategy that is most advantageous to both you and your child.
Divorce and taxes are stressful – allow a caring and competent team of professionals to help you navigate these uncharted waters. Contact us at Jones Law Firm, PC, for a confidential consultation to learn how we can help you move forward.
