by Katherine Mioni–Milton Family Law
Tax season is here, and for divorcing couples, there are a few tax considerations they should keep in mind. Below are five frequently asked questions about divorce and taxes for divorcing couples.
What Is My Filing Status?
Your tax filing status is based on the marital status as of December 31st of the year in question. Single filing status is available for unmarried individuals as of the end of the year. If you were still married on December 31st, then you and your spouse must file a return as “married, filing jointly” or “married, filing separately.” While you may not want to file married because you have been living separately and have not relied upon each other’s income, this is the preferred status. Filing married has many tax advantages associated with it, such as the exclusion limits for capital gain on the sale of a principal residence.
Can I Qualify as Head of Household?
A taxpayer may qualify for head of household filing if the following 3 requirements are met:
- The taxpayer is unmarried on the last day of the year (December 31st);
- The taxpayer has paid more than half of the cost of keeping up a home for the year; and
- A “qualifying child” has lived with the taxpayer in the home for more than half of the year.
The reason you may want to file as head of household is that the applicable tax rate usually will be lower than the rates for single or married filing separately. Furthermore, you may also receive a higher standard deduction.
Can I Claim the Dependency Exemption?
A “qualifying child” is a dependency exemption for the parents’ joint return. A qualifying child must have the same principal home as the taxpayer for more than one-half of the year, and the qualifying child cannot provide more than one-half of his or her own support during the year. The right to claim your child as a dependent belongs to the custodial parent. However, if the child meets the definition of a qualifying child for more than one parent, then the parent with longer custody gets the exemption. If both parents have equal placement, the one with the higher adjusted gross income gets the exemption.
Is Child Support Income?
Child support is not income. Therefore, you do not have to claim child support as income if you are receiving it nor can you deduct it if you are paying it.
However, you might be paying expenses for your children that are deductible.
Is Alimony Income?
Alimony is income. Therefore, you do have to report alimony as income if you are receiving it or you can deduct it if you are paying it under the following conditions:
- If payments are made in cash;
- The payments are received by or on behalf of the former spouse under a divorce agreement;
- The instrument does not designate the payment as one that is not includible as income to the recipient for deductible by the payor;
- The payor does not have to continue the payment after the death the recipient spouse;
- There must be a decree of divorce requiring the payor spouse to make payments to the recipient spouse.
When you make payments under all of these circumstances, you can probably deduct the payments from your income.