Tax Changes With Divorce

After a legal separation or divorce some people may not realize the changes in tax filing that’s ahead. There is more to worry about beyond who  gets what deductions; the array of issues you need to address is quite extensive.

Filing Status 

A person’s filing status depends on whether you were married on January 31^st of the tax year in question. Even couples not physically living together at the end of the year are considered married by the IRS for their purposes if there is no legal separation or divorce on the books. That status impacts your filing requirements, standard deduction, and whether you are eligible for certain tax credits:

When Should I File as Single?

• You file as single if your legal divorce or legal separation is documented in the tax year under consideration;
• You may file as head of household if you remarry in the same year following your divorce.

For Those Still Married at Year’s End

 There are several options for people who are still legally married at the end of the year:

• File jointly as married, combining both incomes and deducting allowable expenses. (This often results in a lower tax burden).
• File as married filing separately, with each person filing a separate return and listing only their individual income and deductions, as well taking advantage of any tax credits for which they are eligible.
• File as head of household if you are still married and/or legally separated, if you meet all three of these key criteria:

1. You lived apart from your spouse for at least the last six months of the year in question;
2. You paid more than half of any home expenses for the year;
3. A dependent child lived in your home for more than half of the year.

Following a Marriage Annulment 

Amended returns must be filed for any tax years impacted by your annulment by the later of two dates:

Within the statute of limitations (three years) from the filing of the original return, or;

Two years after paying the tax.

Support Payments 

• Child support payments are not deductible for the payer and must not be claimed as income by the recipient.
• Those divorced prior to 2019 have rules saying that alimony payments may be deducted by the payer and included as income for the recipient;
• For those divorced during or after 2019, payers may not deduct the payments, and recipients are not required to claim the money as income.

Claiming Dependent Children 

In most cases the custodial parent is able to claim dependent children–unless specified otherwise in the divorce decree– on their taxes. When there is a joint custody situation, the parents can choose how they want to handle this issue. Some may choose to alternate every other year, while others with multiple children may have certain kids assigned to each parent, for example. When parents can’t agree on how to handle this matter, the IRS has tie-breaker rules to make the determination for you.

 Advocating for You 

The experienced Boca Raton divorce attorneys at WiseLieberman always help you to achieve the best possible outcomes in an annulment, legal separation or divorce. To discuss your questions, schedule a confidential consultation in our Boca Raton office today.

Source:

irs.gov/newsroom/some-tax-considerations-for-people-who-are-separating-or-divorcing