Divorce and Uncle Sam: Top 10 Things You Should Know When Filing Your Taxes


1. What is my filing status? (Married, Single, Head of Household)Marital standing at year end determines your filing status for the entire year. If you have a decree of divorce or separate maintenance, signed by a judge, you should file as single. Regardless of whether you have a signed decree you may be able to file as head of household. Filing as head of household may reduce your income tax obligation, but to qualify the following conditions must be met:

• You paid more than ½ the cost of keeping up your home for the tax year,

• Your home was the main home for your child for more than ½ the year, and

• Your spouse hasn't been a member of the household for 6 months.

If you can't file as single or head of household, then you must either file as married filing joint or married filing separate.

6. Should my spouse and I file as married, filing separate or married, filing joint?

Filing joint may provide some tax benefits over filing separate. However, by filing separate the IRS can't hold you responsible for any unpaid taxes caused by your spouse's actions or omissions. The "innocent spouse" rule provides relief from this responsibility in some cases.

2. Is alimony taxable?

In general, alimony is taxable to the recipient (line 11 of the 2004 Form 1040) and deductible to the payor (line 34a of the 2004 Form 1040). However, some couples stipulate in their separation agreement that the alimony won't be deductible to the payor, or taxable to the recipient.

3. Is child support taxable?

No. Child support is neither taxable to the recipient nor deductible to the payor.

If the payor owes both alimony and child support but pays less than the total amount owed, the payments apply first to child support and then to alimony. If the separation agreement doesn't delineate separate alimony and child support payments, general "family support" payments are treated as child support for tax purposes, unless the alimony qualifications are met.

4. Who gets to claim the dependency exemption for the children?

In general, as long as the parents combined contribute at least ½ of the support of the child, the custodial parent gets the dependency exemption for the child. If custody is split or undeterminable, the parent who had physical custody for the greater part of the year gets the dependency exemption. Custodial parents can waive their right to the dependency exemption by filing Form 8332.

5. Who gets to claim the Child Tax credit and the Household and Dependent Care credit.

Only the parent who claims the exemption for the child may claim the Child Tax credit for that child. Unlike the exemption, it can't be traded. If you are the custodial parent, you can claim the Household and Dependent Care credit for the child even if you cannot claim the child's exemption. If you are the non-custodial parent, you cannot claim the Household and Dependent Care credit for the child even if you can claim the child's exemption.

7. Are my divorce costs deductible?

In general legal fees are considered personal expenses so they aren't deductible.

However legal fees paid to get alimony and legal fees regarding the tax effects of divorce are deductible. The attorney must allocate fees paid for deductible and non-deductible services otherwise the deduction may be disallowed. The allowed deduction is a miscellaneous itemized deduction which is deductible only to the extent that, in the aggregate, the miscellaneous deductions exceed 2% of the taxpayer's adjusted gross income.

8. My spouse and I are using the married, filing separate filing status. Can I use the standard deduction if my spouse itemizes?No. If spouses are using the married, filing separate filing status and one spouse itemizes their deductions, the other spouse must itemize as well.

9. Who gets the mortgage interest deduction and other itemized deductions?

If the marital home is owned by one spouse alone, only that spouse may claim a mortgage interest deduction. Deductible expenses that are paid out of separate funds, such as medical expenses, are deductible by the spouse who pays them. In general, deductible expenses paid out of joint funds are split 50/50 between the spouses, including mortgage interest. Mortgage interest for property titled by the entireties can be claimed by whichever spouse actually paid the expense.

10. Where can I go for more information about divorce and tax issues?www.rosendivorce.com/taxes

Jessie Danninger is a financial analyst with Rosen Divorce. She assist clients in all financial matters relating to divorce, including property distribution, child custody, alimony, and tax related issues. She is a certified divorce financial analyst and CPA.

With offices in Raleigh and Charlotte, Rosen Divorce is the largest divorce firm in North Carolina. Founded in 1990, the firm is dedicated to providing individual growth and support to couples seeking divorce by helping them move forward with their lives. Our staff of attorneys, accountants, and specially trained divorce coaches expertly address the complex issues of ending a marriage. Our innovative approach acknowledges that divorce is so much more than just a legal matter. Specialties include child custody, alimony, property distribution, separation agreements, and domestic violence relief.

For more information on Rosen Divorce, or for an interview, please contact:Alison Kramer, Director of Public Relations, Office: 919-256-1542, Cell: 919-523-7104 akramer@rosen.com

***

ROSEN DIVORCE4101 Lake Boone Trail, Suite 500Raleigh, NC 27607http://www.rosendivorce.com"Divorce is Different Here"


More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Divorce Information:

Related Articles

Is Your Marriage Problem Severe Enough To Warrant Getting A Divorce?
Having a marriage problem can be agonizing especially if you're trying to do all you can to make your marriage work. Depending on how your marriage was prior to thinking that you had a marriage problem, you could be in for a hurtful time if you don't take a step back and look at your marriage problem from a "helicopter" viewpoint.
Should I Get Divorced? Or Not?
No one besides you can determine whether or not a divorce is right for you! But, there are some general questions which pretty much apply to everybody. Thinking about the following issues may help you answer this question for yourself!What specifically is making you think of divorce?Physical AbuseIf your spouse is violent to you and/or your kids, this is a safety issue.
Effects of Divorce on Children
When a couple decides their marriage is over, a tremendous sense of grief and relief are felt. A recently divorced person will feel grief over the loss of their marriage and the loss of their partner in life.
Deciding On Spousal Support
No matter which side you are on, spousal support is something that will need to be taken care of during a divorce. Something must be decided about spousal support, yet, where are you to begin? What are you going to do to resolve this issue of spousal support? Are you afraid to ask for what you already know you deserve, support? Or, are you on the other side, wondering what is going to be required of you as far as spousal support goes?What is spousal support? Who is entitled to spousal support? Spousal support is support given in the form of money or possessions that helps to support a spouse after a divorce.
Divorce -Is It Lawful?
The question of divorce and its lawfulness is of long standing. The law-makers of our day have tried to answer the question.
Spousal Emotional Abuse During Divorce--What You Can Do
Is your spouse violent, abusive, harassing? In cases of harassment or violence there are legal remedies and there are practical things you can and must do for yourself. This is not about reaching agreement--these are strategies for self-defense.
Divorce, The Hardest Thing You Have To Do
Knowing What To Do In DivorceKnowing what to do when you are faced with a divorce is often hard to figure out. But, you can and you will get through it.
Two Hearts Are Now One
It is fitting that I should write this story on Valentines Day, for this is a story of two broken hearts; healed and mended, then melted together as one--in an instant. This is a story of True Love.
Healing Dysfunctional Families
In a recent article entitled "Some Evidence On How We Are Spiritually Connected" I reported on a case study that revealed how individuals who share common traumatic memories can help each other release the trauma at a distance employing a new tool called the Mind Resonance Process(TM). In this article I will elaborate some of the potential applications of such a result as well as its far reaching implications.
Too Many Divorces
My oldest boy asked me something the other day about all the news regarding the high divorce rate. I told him there aren't too many divorces, there's too many marriages.
The Legal Side of Divorce
While divorce can be an emotionally draining experience, even in the best of situations, it can also be a complicated legal matter that affects both parties equally. No matter how long your marriage has lasted or how few belongings you share together, it is also best to involve an attorney in your divorce proceedings.
Women And Divorce: How Women Should Protect Themselves Financially Regarding Divorce
Women who believe a divorce is a possibility or who think that their husband will be asking about getting a divorce at some point should put their emotions aside and plan "just in case" their intuition is correct that a divorce may be coming in the near future. If women who believe that the "divorce discussion" may be lurking, they should make it a point to look for solid signs that their husband will indeed ask for a divorce.
Divorce--Negotiating Agreement: Ten Steps
The best predictor of a good divorce outcome is the degree of client control over the negotiation--everything works much better if you have it. This doesn't mean you should not get help and advice from an attorney if you want it; it means you are better off if you plan to do most or all of the negotiating yourself.
Divorce: Secrets To Coping With A Divorce Announcement
During a wedding ceremony, when people are joined together in matrimony, they swear and vow to honor and respect each other and to remain partners both during good and bad times.But in most marriages, this is not always the case.
Divorce
The most recent statistics show that about 50% of all marriages end in divorce. It is not very encouraging to enter into any kind of relationship knowing that it only has a 50/50 chance of being successful.
Choosing Your Divorce Method
The biggest mistake that people make when getting divorced is that they fail to plan. They simply decide to leave the relationship and then enter and ugly and expensive battle that ends up hurting everyone involved.
Hidden Divorce Costs
Divorce has become part of life in the 21st century. The stigma of being divorced that once existed no loger exists.
Divorce--How to Beat the System
Of course you want to get your Judgment--that's the goal of your legal divorce--but you don't want to go through the adversarial legal system to get it. You don't want to get all tangled up with lawyers and courts, because the system is designed to work against you.
How to Recover From Divorce
As a licensed mental health professional, I work with many individuals, couples, and families who are affected by divorce. I have developed this list of survival strategies for people who are experiencing divorce.
Steps Toward Divorce
When you're faced with the possibility of divorce it's important that you make sure you and your children (if you have any) are taken care of. Before you even visit the attorney you'll want to assess your financial situation.