The dissolution of a marriage in the state of Alabama is a process that brings many significant life changes. These changes may include splitting the children between two households and dividing the marital assets. However, one important yet often-overlooked change following divorce includes how taxes are filed.
An important matter to address when working toward a divorce settlement agreement is which parent will be able to claim the children as dependents. The exemption amount may change from one year to the next. However, the amount for a single child in 2017 is more than $4,000. This exemption starts phasing out if the household head earns more than $287,650.
If there is no information in the settlement about who will get the exemption, it is within the right of the custodial parent to take advantage of it. Oftentimes, the parents agree on this issue during their divorce negotiations. Then, the exemption is shared or traded with the non-custodial parent through the use of IRS Form 8332. This may make the most sense financially if one of the spouses happens to be in a higher income tax bracket.
Negotiating a divorce settlement is a viable alternative to going to trial if the two spouses are willing to discuss their issues, including tax- and finance-related matters, in as amicable a way as possible. If they cannot do so, then a judge in the state of Alabama will have to step in and make these decisions for them. Unfortunately, the court’s decision may not align with the wishes of one or both of the parties.
Source: wtop.com, “5 things women should know about taxes after divorce“, Dawn Doebler, March 22, 2017