Divorcing parties need to remember to change the number of allowances they claim for Federal and State income tax withholding during the divorce process. Failure to do so could result in significant, and unplanned, tax liability.
For example, many people file joint income tax returns with their spouse and claim their children as dependents. However, once divorced, or even during the divorce process, the parties may decide to file individual tax returns, even before the divorce becomes finalized. Doing so usually results in increased tax liability. There may also be disputes as to who claims the children on their tax return as dependents.
To mitigate against a change in tax liability based on your filing status, a party going through a divorce should consider adjusting the number of allowances he or she claims on IRS Form W-4. Although this may result in lower net pay each pay period, it will offset the potential increased tax liability at year end.
You should contact your lawyer or accountant to see if this issue affects you.
For a free initial divorce consultation, call our offices at 301-444-4660 today.
www.freestatedivorce.com
www.sternlegal.net
Monday, August 13, 2012
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