Divorces can be messy and will impact different aspects of your life. One area that will change is your tax filing status. Each person’s tax status is determined by their marital status at the end of the calendar year.
If you were separated but still married at the end of last year, you will still need to file a joint tax return. However, if you were officially divorced before the 31st of December, you are required to file a personal tax return.
The filing status will not be the only post-divorce tax change. If you lose custody of your children, you can no longer file them as dependents on your tax return. Having custody of your children will also provide you with tax credits, such as the Canada Child Benefit. Having sole custody or shared custody will impact the monetary amount of this benefit.
It is important to note that if you are required to pay child support, these payments are not deductible for the payer (or taxable for the recipient unless your financial agreement predates 1997).
When going through a divorce, it’s critical to stay on top of these changes and understand how they will impact your tax return. Seek the help of a professional if you have questions or need assistance understanding your changing tax obligations.
If you have any questions about how your taxes will be affected by your divorce, speak to a tax professional at NaickerCPA. Our team can help you understand the changes in filing status and ensure you are taking advantage of all the benefits and deductions available.
If you have any questions about this article or business taxes, in general, or you want to make an appointment with an accounting professional at Naicker & Associates, please contact us at (604) 469-9369. We are based in Port Moody, BC.
