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As we enter what my accountant friends call “Tax Season”, I thought it might be helpful to offer some thoughts on divorce and taxes. Nothing in this post is tax advice and I would certainly defer to teh recomendations of your tax preparer.
Do I have to file a joint return?
If you are married at the end of the tax year (December 31st) you always have the option of filings joint return or an individual return. If you are divorced at any time during the year, you can longer file a joint return. Generally, there are advantages to filing jointly when possible.
Do I have to declare my alimony payments?
Failing to declare your alimony payments as taxable income is a sure way to draw the scrutiny of the IRS. Remember, alimony is tax deductible to the payor. He or she will list it as a deduction and in doing so, needs to include the Social Security Number. I have to imagine that one of the first things the IRS does in reviewing returns is cross check the social security numbers.
Who can claim the kids as dependent so?
If you are filing joint returns, this is not an issue.If you are filing separate returns, you need to coordinate who claims the child(ren). In the settlement agreements I prepared for clients this is spelled out so that each party knows what to expect and can tax plan accordingly.
Are legal fees tax deductible?
Generally, legal fees for a divorce are not entirely tax deductible. However, fees incurred in dealing with alimony may be deductible. SPEAK WITH A TAX PPROFESSIONAL ON THIS POINT before making any submissions to the IRS>
About Sandy Durst
Sandy Durst, Esq., is the founding partner of The Durst Firm where he heads the Family Law Department. Individuals facing a divorce benefit from the combination of legal skill, common sense and compassion that Sandy brings to each and every matter. Each case is given the personalized attention it deserves.