Going through a divorce is a challenging time. Figuring out how this life change will affect your taxes can be more challenging still. While your divorce was likely not a happy occasion in your life, there can be some advantages of your new tax filing status. Here are a few tax breaks you may be eligible for:
Credit for children
If you and your ex have a child together, and your child lives with you more than 50% of the time, then you may be eligible to claim the Child Tax Credit. For filing year 2021, this credit is $3,600 for children under the age of six, and $3,000 for children ages six through 17. It’s worth noting that only one parent can claim this credit, so it’s important to make sure that your ex isn’t claiming this credit as well – or it could raise a red flag with the IRS.
One common assumption is that after you’ve divorced, you should file as single. However, depending on your circumstances, this may not be the most advantageous status for you. If you and your child live together for more than half the year, and you pay the majority of the household expenses, then you may actually qualify to file as head of household – which usually leads to greater tax benefits overall.
Since the Tax Cuts and Jobs Act went into effect in 2019, alimony is no longer deductible for divorces occurring after this date. However, if your divorce was finalized on or before December 31, 2018 – and it has not been modified since – then you can deduct alimony payments if you are the paying ex-spouse.
Medical expenses for children
If you pay for your child’s medical expenses – and these constitute at least 7.5% of your income – then you can deduct these in your tax filing. This holds true regardless of whether you have custody of your child.
There are a variety of factors that can affect your bottom line. Consulting with a tax attorney can help to ensure that you get all of the tax breaks you deserve.