When my husband I decided to start a business, we didn't think about the legal aspects of doing so. We didn't realize that purchasing business insurance, getting building permits and making investments all required some type of legal advice. But after speaking to a close friend, who also happens to own a small business, we contacted a business attorney. Now, we have the legal smarts to make the best decisions for our business, as well as the legal representation in case something happens to our company. I hope that you find my blog helpful and informative for your own business. It's a great resource for finding the legal advice, resources and guidance you need to get your company up and running.
Once you file for divorce, it can take months or years for the divorce to be finalized. During this time, you and your spouse will have to make some decisions and create an agreement to follow until the divorce is through. This is often called a temporary divorce agreement, and it is designed to help you know what your responsibilities are with your assets, debts, and children during the separation. As you make this agreement, there are several tax issues you should discuss and put in writing, and here are a few of them.
Should You File Together Or Separate?
Until your divorce is finalized, you will have the right to choose whether you each file your taxes separately or if you will file together. There may be certain tax advantages of filing together, or you may find that you are better off filing on your own. Your temporary agreement could specify how you will file, or you could have it state that you and your spouse can make this decision together at tax time.
If you agree to file together, you should have the temporary agreement state that the tax refund or taxes owed must be split evenly between both of you. This is very important to include on your agreement so you can avoid arguments when tax time comes around.
If you decide to file separately, it's important to realize that only one of you will be able to file as "head of household." The other spouse must file as "married filing separately." If you are planning on filing separately, you will need to agree on which filing status you will each get to choose. There are several different rules relating to this, so you must make sure you follow the tax rules when making this decision. One of these rules is that the person who files head of household must have paid over 50% of the costs to maintain the family home.
Who Gets To Claim The Children?
The other major decision you will need to make is which spouse will get to claim the children, if you decide to file separately. Claiming a child offers tax benefits, and this is why it's important to understand how this works as you are creating your temporary divorce agreement. Each child you claim on your taxes is considered a dependent, and each dependent is worth $4,000 on your taxes. When you claim your kids as dependents, this money is subtracted from your adjusted gross income, and this causes your tax liability to be lower.
In addition, you can also get a $1,000 child tax credit for each qualifying child you have, and you may need to discuss this issue with your spouse as well. Typically, this credit is given to the parent that has custody of the child the most.
You should also realize that whoever pays child care for the children may also have the right to write off some or all of the money paid for this purpose. If you have custody of the kids and have to pay child care expenses, you will most likely automatically have the right to write this off of your taxes.
Can You Write Off Your Legal Fees?
Writing off legal fees is something that is allowed for certain things; however, you will not be able to write off the fees you pay to your divorce attorney for your divorce. If you or your husband pay a tax lawyer for advice on handling tax issues related to your divorce, you can write these off.
There are a lot of things to know and think about during a divorce, and you can learn more about this by talking to your divorce lawyer.