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Tax changes for the year following a Colorado divorce

If the experience of divorce could be summed up in one word, that word might be "change." When a Colorado spouse makes the transition from married to single, virtually everything about his or her life will change. One thing that many people overlook during divorce is the impact that the change will have on their taxes. It is important to plan for those changes, which will differ from one couple to another.

One of the most obvious changes that will come on the heels of a divorce is an individual's filing status. Most spouses will file as "married" during the course of their marriage, but after divorce that status will change to "single." For parents who will maintain primary custody of their kids, it may be possible to file as "head of household," which has certain benefits.

Also, parents need to consider how to divide the tax benefits that come with having minor children within the family. Certain credits, such as the Child and Dependent Care Credit, are only available to the parent who has physical custody of a child. Other benefits, such as the exemption, the Child Tax Credit and credits for certain care expenses can be claimed by either parent.

These are benefits that can and should be part of the overall divorce negotiation strategy. Depending on the financial circumstances of each Colorado parent, having the ability to make use of these credits and exemptions can make a huge difference in the bottom line come tax time. Many non-custodial parents fail to realize that the issue is up for negotiation, and simply assume that the parent with primary physical custody is entitled to all of the tax benefits. This, however, is simply untrue, and can result in leaving money on the negotiating table during divorce.

Source: fool.com, "Here's How Your Taxes Changed If You Just Got Divorced", Dan Caplinger, Feb. 11, 2016

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