Divorce is an emotional process and due to this some issues may be overlooked that can have a negative impact at tax time. Below are some questions you should ask yourself during the divorce process and at tax time.
1. What is my filing status after divorce?
Your marital status at the end of the year determines your filing status. If you have a settlement agreement and final decree, you can file as single. You may also file as head of household, which would decrease your tax obligation. To qualify as head of household you must meet these conditions.
- You paid more than ½ the cost of keeping up your home during the year.
- Your home was the main home for you and your children for ½ of the year.
- Your spouse hasn’t lived in the home for six months.
2. Should I file jointly with my ex spouse if I am eligible?
You can and, doing so may provide some benefits over filing separate. Keep in mind though, if you file jointly and your ex doesn’t meet their obligations to the IRS you can be held responsible.
3. Is child support taxable?
No, it is not taxable to the recipient or deductible to the payor. However, if the payor is paying both alimony and child support but is paying less than he/she is supposed to, the payments will apply to child support and then alimony. Therefore, if you are behind on child support but keeping up with alimony be sure you don’t...read more about income tax and divorce