Divorce and Tax: 7 Things You Need to Know
If you’re recently divorced and will be filing your taxes on your own for the first time, there may be some confusion over how exactly you should file and how your divorce can impact your financial status. To help clear things up, here are seven tips for filing taxes post-divorce you should consider:
- Change Your Filing Status
Even if you are “single,” your tax filing status is determined by your marital status on the last day of the tax year. As such, if you were divorced in March of 2015, but were still married on December 31, 2014, then you’ll need to file as such for the 2014 fiscal year. On the other hand, if your divorce became final or “absolute” on December 31, 2014, then you should consider yourself divorced for the entirely of 2014. If you’re legally divorced, then you need to file as head of household or as single.
- Know That You’re Not Responsible for Your Spouse’s Unpaid Taxes
If you file your taxes separately after a divorce, it’s important to note that you will not be held responsible for your spouse’s unpaid taxes. On the other hand, if you file jointly, even if you are divorced, you may still be held liable for any taxes that go unpaid.
- There’s No Deduction for Child Support Payments
Those who are currently paying child support payments often wonder whether or not they can deduct those payments on their taxes. Unfortunately, the answer is no – child support payments cannot be deducted.
- Spousal Support/Alimony Payments May Be Deductible
While you can’t deduct child support payments, you may be able to deduct spousal support/alimony payments in some cases. Make sure you meet with your CPA (certified public accountant) to learn more about this deduction type.
- You’ll Need to Pay Taxes on Spousal Support Payment Received
On the other hand, if you’re the recipient of spousal support payments rather than the payor, then you’ll need to pay taxes on any spousal support income you receive.
- Transfers of Property are Not Taxable
When divorce occurs, property is often divided or split between divorcing spouses. All types of property that are transferred between the spouses, ranging from cash to real estate, are not taxable (i.e., the IRS does not tax gains or losses made from the transfer). The first initial transfer, from a husband to a wife or vice versa, is tax-free; the second transfer (if one spouse wants to liquidate assets) is subject to taxes.
- You’re Entitled to Overpayments if You FIled Jointly
If you and your ex-spouse filed your taxes jointly for the year, you are entitled to a portion of any overpayments. Your attorney can help you to make sure that you’re awarded the amount that you’re owed.
Contact a Divorce Attorney to Learn More About Asset Division in Divorce
If you want to learn more about asset division in divorce, child support payments, spousal support, and how all of the above may affect your taxes and your financial life, call the attorneys at The Law Offices of Michael F. Mimno as soon as possible. The sooner we get to work, the sooner you can start securing your financial future. Reach us at 978-470-4567.