When going through a divorce, your number one priority may not be figuring out how your divorce can affect you financially down the line. It is normal for those undergoing divorce to focus on child custody, property division, or the emotional aspect of your divorce. While you may view your divorce as emotionally costly, the financial costs are important to consider too.
The Cost of Divorce
Unfortunately, it is not free to file for divorce. When considering a divorce, you should factor in these costs:
- Filing fees for your divorce
- The cost of your attorney’s retainer and hourly rate
- Additional court fees
- The cost of financial independence during your divorce
- Any financial obligations you need to pay
You should also assess if you can afford to reach financial independence following your divorce. If immediate financial freedom is not possible, you may seek spousal support if you are eligible. Consult your divorce attorney to learn more about seeking alimony during your divorce.
Divorce and Your Taxes
While you were married, you most likely either filed your taxes jointly with your spouse or “married filing separately.” When you divorce, you may not achieve the same benefits as filing jointly or as a married person.
As long as the court finalizes your divorce by the last day of the tax year, you will need to file as single or head of household on your taxes. If your divorce is not finalized by the last day of the tax year, then you will still need to file your taxes as married filing jointly or married filing separately. If you are unsure of how you should file your taxes or if you are granted any exceptions, consult your tax advisor or private accountant.
As you change your filing status, you will also need to adjust how much you pay in taxes, as your tax bracket may have changed. Persons married and filing jointly will have higher income allowances in their brackets. Once those persons begin to file separately, they might change tax brackets, especially if they earned substantially more or less than their spouse.
If you are unsure of what tax bracket you will fall into, consult the IRS’s tax and estimated tax booklet. The tax schedule on pages 16 and 17 will not only tell you what bracket you fall into, but you can also calculate your expected taxes for your income.
If you have children, only one parent will be able to claim their children as dependents. According to their time-sharing agreement, this is typically the custodial parent or the parent who spends the most time with their children. However, either parent is eligible to claim their children as dependents so long as the other parent does not also claim their children as dependents on their taxes.
Since either parent can claim their children as dependents on their taxes, it is best to discuss who will claim your children as dependents while working out the time-sharing agreement. This agreement should be written out for future reference, so if there are any arguments about who can claim the children on their taxes, both parties can refer to the time-sharing agreement’s details.
Child Support Payments Post-Divorce
If you share children with your spouse, you may need to pay child support following your divorce. If the court orders child support to be paid, the ordered parent must pay child support to the other parent. You can seek child support at any time during or after your divorce as long as you and your children’s other parent are not married.
Child support may be ordered even in cases where parents share joint physical custody and have a fairly equal amount of time on their time-sharing agreement. Despite the equal time-sharing both parents must equally provide for their children so that the child can grow in similar financial environments.
Questions About Your Financial State and Divorce?
It can be overwhelming with all of the changes divorce brings. If you have questions about how divorce will affect your financial situation, consult your divorce attorney.
Our San Diego divorce attorneys are experienced in divorce, spousal support, and child custody and support arrangements. Call us today at (619) 485-6476 to schedule your case evaluation with our team of compassionate divorce attorneys.