Tax Implications of a Divorce

Tax Implications of a Divorce

Divorce can be challenging, particularly when it comes to tax time. Which spouse owes taxes? What forms and returns need to be filed? When do I need to file? How do I file? What is the best tax planning strategy for my divorce?

Tax Filing Status

A taxpayer will be considered unmarried at the end of a tax year if his/her spouse is legally separated from the taxpayer under divorce decree or separate maintenance contract at the close of the tax year.

A married taxpayer will be considered unmarried and eligible for head of household status if the taxpayer's spouse was not a member of the household for the last six months of the year and the household is the home of a dependent child.

Liability on Joint Return

You may request relief from liability for tax, plus related penalties and interests for which you believe that your spouse (or former spouse) should be liable.

Innocent Spouse Relief is available if you: (1) filed a joint return and (2) are no longer married to (or are legally separated from) the spouse with whom the joint return was filed.

Dependency Exemptions

In general, the dependency exemption for children of divorced taxpayers will go to the parent who has custody of the child for the greater part of the calendar year.

Alimony and Spousal Support

In general, alimony and separate maintenance payments are income to the recipient and are deductible by the payer. Different rules apply to alimony that went into effect prior to 1985.

If you have specific questions about the tax implications of a divorce, you should speak to a licensed tax expert.

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