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Divorce can impact taxes

| Apr 17, 2014 | Property Division |

As Florida couples consider divorce, they might think about the welfare of their children or the disposition of their property. Another critical issue they may want to consider is their tax returns going forward. That is because divorce may have several implications on the way both spouses file their taxes.

For instance, divorce will change a spouse’s filing status. The IRS determines individuals’ tax status based on their relationship status on the last day of the tax year. Therefore, if couples divorce any time prior to year’s end, each spouse must file as either single or head of household, with the latter status available only if a qualified dependent lives with the taxpayer. This status is important since it determines the spouse’s tax bracket and eligibility for exemptions, deductions and credits.

When couples separate but do not legally divorce by year’s end, they may file separately or jointly. Spouses who file jointly may take advantage of certain tax credits but are also liable for their partner’s tax liability.

Some parents may believe that child support is tax-deductible, but this is not the case. However, spousal support is tax-deductible, even for individuals who do not itemize their deductions. The alimony-paying spouse must remember to retain the alimony-receiving spouse’s Social Security number in order to receive tax deductions for those payments and to not pay a $50 penalty. Since the IRS considers alimony payments taxable income, the spouse who receives the support must include this amount on his or her tax-filings.

These issues may be complicated, and so individuals going through divorce often consult with a family law attorney. Similar to asset division and child custody, tax implications are a major consideration in any divorce.

Source: Yuma News Now, “How Marriage And Divorce Can Impact Your Taxes”, April 05, 2014

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