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How tax law will influence divorce

Texas residents who are going through a divorce will need to learn a new set of tax rules related to being a single filer. For instance, an ex-spouse with children may benefit more from being able to claim the Head of Household (HOH) designation on their tax return. A parent qualifies if they had a dependent living in their home more than 50 percent of the time.

Furthermore, that parent would need to have paid for more than 50 percent of the household expenses. Those who are eligible for HOH status may also claim a child tax credit that is worth up to $2,000. While the credit was eligible to be traded in the past, it is not clear if this is the case now. Ideally, a parent will write into their divorce agreement that they will trade it if it is deemed permissible in the future.

Parents may also want to create other clauses in their divorce agreement that allow them to both benefit from the credit. It is important to note that credits are generally more attractive than exemptions. This is because an exemption merely reduces taxable income while a credit results in a direct reduction in how much a person owes in a given tax year.

An attorney may be helpful resolving divorce issues such as who gets to claim a child on a tax return. Legal representation may be necessary whether an individual chooses to resolve a divorce through mediation, litigation or other means. Generally speaking, ending a marriage in a civil manner can help parents retain quality relationships with each other and their children. It may also result in children feeling less stress and anxiety over the fact that their parents will no longer be together.

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