Hafemeyer Law

Tax Time Reminders for Recently Divorced Individuals

It’s that time of year again: time to file taxes. For individuals who have been recently divorced, there are a couple of tips regarding tax filings to discuss with your accountant. It is important that you let your accountant know that you were recently divorced. This life event can impact many areas of the return.

Alimony & Child Support

While no two tax situations are the same, some areas to make sure you discuss with your accountant include payments made or received for alimony and child support. Typically, alimony payments need to be reported as income to the person that receives it and a deduction for the person who is paying it.  Child support is generally not taxed nor can it be deducted.

Dependents

It is also important to understand the allocation of dependents for each spouse. Marital termination agreements or the divorce decree should include the courts determination on which parent may claim the dependent children on their tax return.  In some situations one parent may claim the children in even years and the other parent on odd years or a split of the dependents based on the custodial situation. Whatever agreement was reached during the divorce process will need to be communicated to the accountant.

Property

Generally, property gained during dissolution is treated like a gift for tax purposes. However, this can vary. Be prepared to explain the details of the property division under the divorce decree to ensure accurate tax calculations are made.

Filing Status

Determining your filing status will likely depend on when the divorce was final. In most situations, if an individual was still legally married during the tax year the filing must show married. If possible it may be beneficial to file jointly for one last year and divide the refund. This may be something to consider during the negotiation process that will allow for a greater tax advantage for both spouses.

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