1. Don’t panic.
Taxes in the United States are incredibly complicated, unfortunately. Still, the IRS has dealt with many divorcees before, so they’ll have procedures for how to navigate your first return as a single person.
2. Start saving money in case you’ll owe taxes.
If you and your spouse sold any large assets such as your home, you both might be responsible for capital gains taxes which can be a significant chunk of money. If money is tight due to debt from the divorce, look into options for reducing your debt load. The best way to consolidate debt is different for everyone, so don’t jump into any strategy without doing your research and figuring out how to free up some extra cash should you owe the IRS a check by April 15. One popular method to consider is getting a personal loan to consolidate debt.
3. Get your paperwork in order.
The first thing you need to do is gather all of your paperwork from your divorce settlement and start organizing it. You’ll need any W-2s, W-9s, 1099s, settlement paperwork if any assets were divided, retirement account statements that were affected, and sale documents if the family home was sold. This will help you avoid making any mistakes on your tax return. Also read: What Is A ULIP Plan and Reasons to Invest In ULIP
4. Talk to a tax preparer.
It can be helpful to speak to a professional about preparing your taxes, especially if you are new to this process. If you’re used to using tax software to do your annual returns, you might wonder what the value is behind paying a professional. It comes down to ensuring all the changes you need are handled correctly so that the federal government or the state doesn’t reject your return. Once all of the changes have settled down and the IRS accepts your return, you can use software for future returns if you prefer. However, this year’s tax filing should have a professional handle it to ensure the complexities of your change in filing status are done in compliance with complicated tax laws.
5. Take the time to understand your tax return.
Ask questions about what’s changed and why; that’s what your tax preparer is there for, after all! Once you have all of your paperwork together, take the time to read through your return and know how it works.
6. Try to be organized.
It can be helpful to have a filing system in place so that your tax returns are organized and easy to find. Keep a copy of all the paperwork submitted with your return and a copy of your filed return, too.
7. Double-check your information.
Once you have completed your return, make sure to go back and double-check all of your information before sending it to the IRS. There is always the chance that you may have made a mistake, and it’s important to catch these mistakes early as filing an amended return can be challenging. Also read: A Guide to Understand if Disability Income is Taxable
The bottom line
Filing your first return as a single person is a milestone that many divorcees face. However, with the right preparation and by following these simple tips, filing your return can be a relatively straightforward process that lets you move on quickly.
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