When faced with a custody battle, many Louisiana parents are primarily concerned on providing their child or children with a safe and stable home environment. However, there are certain financial ramifications that come with various custody outcomes, including sole custody. A parent who is able to secure sole custody of one or more children will have a significant change in his or her tax obligations.
Those changes began with an alteration in the parent’s tax filing status. While married, most individuals elect to file their taxes under the status of “married.” Once divorce has taken place, spouses usually have the option of filing their next full tax return as either “single” or “head of household.” Filing as head of household can have a significant positive impact on a parent’s tax return.
A related matter is determining which parent will have the authority to claim a child or children as dependents on his or her next full tax return. While many people assume that the custodial parent automatically has the right to claim kids as dependents, in reality, this is an issue that can be negotiated during divorce. In some cases, claiming dependents will benefit one parent far more than the other. If the custodial parent agrees to allow his or her ex to claim the children as dependents, then it may be possible to ask for other accommodations within the divorce settlement.
When considering tax matters and divorce, Louisiana parents should think carefully about their financial plans for the years ahead. A parent who is able to obtain sole custody of one or more children can expect to have a drastically altered tax scenario than the one in place during the marriage. Planning around those changes can make a big difference during tax time.
Source: wtop.com, “5 things women should know about taxes after divorce“, Dawn Doebler, March 22, 2017