Individuals in New York who have recently been divorced could see their tax deductions drop dramatically. While marriage does include a lot of nice tax breaks, it's possible for divorcees to save money by filing as a head of household instead of as single.
Filing as head of household requires a person to be single and have a qualifying dependent (such as a child) live with them for over half the year. The taxpayer must also have contributed the majority of support toward maintaining a household during the last year.
The standard deduction for a person filing as head of household is $18,350 in 2019 while for a single filer it is $12,200. Single filers may see their deductions drop after divorce since filing as a married couple allows them to claim a $24,400 combined deduction. However, single parents can who have custody of their children may qualify for a $2,000 child tax credit.
Non-custodial parents can claim children on their taxes if the custodial parent is willing to sign over their rights to do so by signing Form 8322. Some child custody agreements allow parents to claim children on their taxes in alternate years. If there are two children and each parent has one child for the majority of the year, both parents can file as head of household.
A family law attorney could help a client make wise tax decisions during and after the divorce process. For example, it may be best for a custodial parent to allow the non-custodial parent to claim minor children on their taxes because doing so would allow the non-custodial parent to pay more child support. Tax laws are subject to change every year, so it is a good idea for anyone with questions about deductions and other matters to seek legal and financial advice.