Marriage and Divorce – How Does It Affect Your Taxes?

When a person experiences a major event in life like getting married or going through a divorce, the tax implications are often not at the forefront of their mind. However, it’s to your benefit to take some time to consider how your change in circumstances will affect your tax return.

Newly married couples will need to decide if filing jointly or separately is best for them. If there is a large difference between your income and your spouse’s, you could benefit from a lower tax bracket if you file jointly. On the other hand, there is a smaller possibility that your combined income might subject you to the marriage penalty and push you into a higher tax bracket. Make sure to consider all your options when filing your taxes, so that you don’t end up paying more than you need to.

Divorce is already difficult, but unfortunately it will also add complexity to your tax filing for the upcoming year. It’s important to keep copies of all relevant documents throughout the proceedings, including any property transfers conducted. If you and your former partner decide to sell a home, you may be subject to capital gains tax. If you have children, keep track of any common payments or costs that you are responsible for, including child support payments and deductions for your child or children’s medical expenses. Depending on whether your divorce is finalized before or after December 31st, you may be able to file jointly with your former partner to minimize your tax liability, and alimony payments may or may not be deductible for the payer and claimable as income by the payee.

We understand that these are big events in your life, and we at Ryder & Company are happy to help. If you have any questions or want assistance in tax planning, don’t hesitate to reach out.

Ryder & Company is located in West Lawn, PA and offers a variety of accounting services, part-time CFO services, payroll preparation, and much more! We also offer tax preparation for individuals, as well as businesses and nonprofit entities. We assist many individuals and businesses in and around Wyomissing, Exeter, and Reading.

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