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File your taxes under the right filing status

While another tax season has come and gone, another tax deadline will be upon us before we know it. During the time in-between, events may occur that will further complicate the process of filing, one being divorce. There are many questions that pop into one's mind, including how does one decide which status to file under-married filing jointly or single and who claims the children as exceptions? There are some tips however, that could relatively simplify the process.

In order to determine which status to file under, consider what you were on the last day of the previous year-were you married or single on the last day of 2014? If the divorce was finalized late in the previous year, then you can file under single status or if you have a child and fulfill the other obligations, file under head of the household status. Otherwise, it may be best to file under 'married filing jointly' status as it tends to lower the taxes.

If you are the custodial parent, it may be possible to further lower taxes by claiming the children as exceptions, if the divorce was finalized last year. It is also possible to qualify for childcare tax credit and education tax credits.

It is also important to understand what is qualifying for alimony and what is not, as the IRS is very strict about this and as it is considered part of the income earned, taxes must be paid on it. Or if you are the spouse paying alimony, you can deduct the payments. Cash, money orders and checks are considered alimony, but property is not.

Knowing the law is very important and it is also the first step to ensuring that all legalities and formalities are being completed. Another way is to consider consulting an experienced attorney and working on finalizing the divorce agreement in a way that works in everyone's benefit.

Source: Forbes, "Taxes and divorce: 6 tips for women," Kerry Hannon, March 7, 2013

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