Income Tax Questions for the Recently Divorced

by Jimmy Verner of Verner, Brumley, McCurley, Mueller, Parker

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April 15 is quickly approaching which means you need to start thinking about filing your taxes, but what if you are recently divorced? How will your divorce affect your federal income tax filing?

Two of the biggest differences you will face are your filing status and how to treat alimony or maintenance. If you have kids, then you must also know how to handle child support and dependency exemption.

Below are four common questions that recently divorced people should know the answers to when completing their taxes.

What is my filing status?

The Internal Revenue Code allows married couples to file jointly or separately. Once you are divorced, you must file separately. But when does the law consider you divorced for tax purposes? Instead of using the actual date of your divorce to determine filing status, Congress selected December 31 as the magic date. If the court signed your divorce decree on or before December 31, then you are considered single for the entire year and must file separately. If the court did not sign your decree by December 31, you are considered married for the entire year even if you’ve already gone to court. In that event, you and your ex may file married-filing-separately or file a joint return.

Does Alimony or Maintenance Count as Income?

In Texas, alimony is payable by contract upon divorce. Maintenance, on the other hand, is court-ordered. Whether you are paying or receiving alimony or maintenance, the result is the same: These payments are deductible by the ex who is paying them and must be reported as income by the ex receiving them.

Is Child Support Deductible?

If you and your ex have children, then the court will have awarded child support to the parent with whom the child primarily lives. Child support payments are not deductible by the paying ex and do not need to be reported as income by the receiving ex.

What is the Dependency Exemption?

There is a common misconception that whichever parent pays more for child support can claim the dependency exemption. In fact, the ex with whom the child primarily lives is the one who can claim the exemption. There is some flexibility with respect to the exemption: If the parents can agree between themselves, then the law allows either one of them to take the exemption. This can help both parents if the noncustodial parent makes substantially more money than the custodial parent. In that event, the noncustodial parent can share the tax savings with the custodial parent. If the parents do reach such an agreement, the noncustodial parent must sign IRS Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent and attach it to that parent’s tax return.

There are many other questions that can arise when you are filing taxes after a divorce. Speak to an attorney or tax professional to ensure you are properly completing the forms.

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