Getting Divorced? Your Taxes Could Be Crushing

Getting a divorce creates enormous changes in many areas of your life, so it's no surprise if you've never considered how your taxes would be affected. Unfortunately, failing to prepare for those tax consequences could result in a major shock when you fill out your next tax return. Some planning and some proactive steps can ease the tax consequences of your divorce and allow you to hang on to a little more of your hard-earned income.

Before your divorce, you most likely used the "married filing jointly" filing status for your federal tax returns. Once you're divorced, you no longer have the option to file jointly; you'll need to use either the single or head-of-household filing status (depending on whether you have kids or other dependents living with you). Unfortunately, this change to filing status often results in a significantly higher tax bill -- especially if you were the primary breadwinner of the household.

For example, let's say you and your spouse together had an annual taxable income of $150,000, and $100,000 of that income was yours. Using the 2017 tax brackets, by filing jointly, you'd pay $28,977.50 in federal income taxes. That means you'll have paid just over 19% in taxes on that $150,000. If you make the same $100,000 in taxable income the year after your divorce and your filing status is now single, you'll pay $20,981.75 in federal taxes (again, using the 2017 brackets) -- almost 21% of your taxable income, not 19%.

Source: Fool.com