In Illinois as elsewhere, divorce is not an easy time. A lot gets that thrown at a person fast. And often the person is not in the best situation for handling the onslaught. One issue that can get overlooked once the divorce has made it into the books is taxes.
Figuring out the tax consequences of a divorce may seem like a low priority after sorting through issues like alimony, child custody, child support and property division. But just because Illinoisans may think that, does not mean that the IRS will be any more forgiving of mistakes that lead to it getting less than it believes it should receive.
What are some of the changes that Illinoisans can expect following a divorce? Below are a few of the more common changes that they can expect.
For one, Illinoisans should expect a much bigger than normal tax bill. Why is that so? Because the divorce may have required Illinoisans to do things that had tax consequences. For example, a couple may have to liquidate their assets such as by selling their house. If so, the IRS will want its cut of the sale (better known as capital gains tax).
For Illinoisans with children, another wrinkle is that they may have a tax credit coming their way in the form of the child tax credit. If so, the child tax credit may be available once the couple has split, although there may be a question as to which ex-spouse can claim the child as a dependent.
Another change is in a person’s exemption level. When they were married, they could deduct a certain amount of their income. After the divorce, they will likely have to deduct less, and that may mean the IRS taking a bigger chunk than in years prior.
Source: FindLaw, “Marriage, Divorce, Taxes and Your Social Security Number,” Accessed May 23, 2015