Divorce and Income Tax

Nothing makes tax preparation more fun than adding the extra stress of separate households, pending divorce or a million questions from your ex. Let’s take a moment to address some of the questions that come up around tax time so that you can get ahead of the game!

  • Child Support: Many times clients ask whether they can claim their child support payments as a deduction on their tax returns.  The short answer is no.  Payments that are made for the sole and separate purpose of child support may not be taken as deductions on your tax returns.

  • Maintenance: Another question we receive quite often is whether maintenance (formerly known as alimony) payments are deductible for tax purposes.  Yes.  Maintenance payments can be taken as deductions.  In addition, if you pay both maintenance and child support, in certain circumstances, the entire amount can be taken as a deduction for taxes.

  • Dividing Tax Returns: If you are still married when your taxes are filed, any tax return you receive is marital property and subject to division between you and your spouse.  Many times a Judge will order that the parties’ tax return be split equally between the parties.  Other times, if one spouse earns substantially more than the other, the spouse earning less will receive a larger portion of the tax return.  This is the case whether taxes were filed Married Filing Jointly or Married Filing Separately.

  • Tax Liability: If one or both spouses file tax returns during the marriage and owe money to the State and/or IRS, this debt is marital debt.  This means that both parties are responsible for re-payment of this tax debt.  Depending on each party’s income and other factors, this debt may be shared equally, or, one party may bear a great responsibility for repayment. The Innocent Spouse Doctrine, where one spouse had no knowledge of the tax liabilities, is an exception to this rule.

  • Dependency Exemption: A final issue that arises quite frequently, is the issue of who may claim the child[ren] as a dependency exemption on their tax returns.  If one parent has sole custody of the child[ren] and has possession of them more than fifty percent (50%) of the time, they are usually able to claim the dependency exemption every year.  However, if the parties have joint or shared custody, the parties typically alternate claiming the child[ren] as a dependency exemption so long as the non-residential parent is current on their child support obligation.

This advice is meant to be general legal advice.  It is always important to consult a tax professional prior to filing taxes to get the most accurate and up-to-date information.

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