As if doing your taxes wasn’t bad enough in a typical year, divorce makes it even more complicated.
Even if you’ve always prepared your tax returns yourself, just glancing at the first page of IRS Publication 504 for Divorced or Separated Individuals might be enough to convince you to see an accountant this year.
It’s smart to work with an experienced CPA at all stages of your divorce, along with your family law attorney. If money is tight, that might seem like a stretch. But it is well worth it—both for peace of mind, and for the money it could save you. At Kendall & Gkikas, LLP, we’re experienced family law attorneys, not accountants, but we’d like to share with you some basic information about what to expect this tax season.
What’s my filing status?
Name, address, filing status… this used to be the easy part. If your divorce was not finalized last year, then your filing status is still married as far as the IRS is concerned. Because the money you earned during your marriage is considered community property, any tax refund you are entitled to must be split with your spouse, and any tax liability must also be shared. (And if you’re behind in your child support, that can also be taken out of your refund.)
Whether you and your ex file “married filing jointly” or “married filing separately” is up to you to decide together. While filing individually usually means that your tax liability will be greater, a court can’t order you and your spouse to file jointly, even if it is in the best interest of both of you.
If your spouse won’t file jointly, and your children lived with you for more than half of the year, you might be eligible to file as “head of household,” which has certain tax benefits. You’ll want to speak to a CPA about your situation—and be sure to keep your divorce attorney in the loop.
If your ex refuses to file jointly just out of spite, you can bring evidence before the judge to show that you and your family would have benefited if you had filed together. Even though your ex can’t be ordered to file jointly, the judge may consider their behavior when deciding other matters, such as custody.
Who can claim the kids?
Speaking of custody matters, the parent who has physical custody for more than half of the year is entitled to claim exemptions for the children. However, the IRS allows you to agree to do differently. In that case, the custodial parent can transfer the exemption to the other parent by signing an IRS Form 8332 for each child.
And that’s not all… alimony and child support
Alimony (spousal support) and child support might seem like the same type of income (or expense), but they are treated very different by the IRS. Alimony is considered taxable income for recipient, and the payer can deduct the payments that they make. Child support is just the opposite, for both parties. While child support is not considered taxable income for the recipient parent, it is not tax deductible for the payer.
But wait, there’s more!
The sale of your home, disbursement of retirement accounts, transfer of property… there’s a lot going on with your finances during a divorce, and a lot of tax events. Again, it makes sense to get the help of a CPA during your divorce, and you’ll find it particularly helpful during tax season.
If you have questions about your divorce, or even if you are just thinking about the possibility of divorce and how it will affect your taxes next year, contact us at Kendall & Gkikas, LLP. You can call 909-482-1422 or email info@parents4children.com to set up an appointment and let us know how we can help you.
