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How taxes may be impacted by a divorce

New Jersey couples may have a lot to deal with in the aftermath of a divorce. However, it is important to stay focused on what a divorce may do to how a person files his or her tax return. For those who finalized their divorce prior to the end of 2017, it may be necessary to file single. Those who did not finalize their divorce in 2017 may still choose to file a joint return.

As part of a divorce, assets may be divided or sold. As a general rule, the divorce settlement should spell out who is responsible for any taxable events that doing so may trigger. In some cases, an individual may owe capital gains taxes after selling assets for a profit. Individuals who pay alimony should be aware that they can write off the amount of those payments. Anyone who receives such payments will need to claim them as income. However, this will no longer be the case for divorces that are finalized after Dec. 31, 2018.

Parents may be able to claim their children as a dependent on their return. Generally, this right is reserved for the custodial parent. The custodial parent is generally defined as the parent who the child lived with 50 percent or more during the past year. However, the custodial parent could waive this right in favor of the noncustodial parent.

In many cases, divorce proceedings are emotional affairs that may be need to be handled in a courtroom. However, many couples choose to have their respective family law attorneys take the lead in negotiating a comprehensive settlement agreement.

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