Divorce Tax Tips
1. According to the congressional revenue act (Tax Cuts and Job Act of 2017), signed into law by former President Donald Trump, you may no longer deduct alimony payments as established in divorce or separation agreements, executed or modified after Dec 31, 2018. Consequently, recipients of alimony established in these agreements will not need to report alimony as taxable income.
2. If your spouse is uncooperative in regard to filing your current tax return, in most cases, you should file separately despite a pending divorce.
3. You can amend two separate returns later, but a joint return can not be amended into two single returns.
4. To file jointly you must be married up to and including the last day of the year even when living apart. The last day of the tax year is December 31.
5. You can file under the single filing status if, by December 31, you were legally separated (separation established by a court of law), single or your marriage was annulled. You may be eligible for head of household status if you paid more than 50% of the household expenses, your spouse did not live with you 6 months of the tax year for which you are filing, you're divorced or legally separated and you and your spouse each file separate returns.
6. Signing a joint tax return holds you and your spouse jointly and severally liable for any taxes due on that return. This includes tax not correctly reported and found later by way of audit and/or assessment.
7. If you receive a tax refund on a joint return, the money could be considered marital property and be divided according to the division of property.
8. Your children must live with you at least half the year in order for you to claim head of household status on your tax return.
9. Only one parent is allowed to claim the child tax credit. IRS tax rules determine which parent will be the one qualified to do so, but often it is the one with the majority physical custody. In some cases, you and your spouse can negotiate to share the credit by alternating years or by selecting different credits for each dependent.
10. If you are married and in the process of divorcing, you can file under married filing separately or married filing jointly. If still married on the last day of the tax year, you may not file as single unless legally separated.
11. Legal fees from a divorce are usually not deductible. However, you may deduct legal fees that were paid to establish or collect alimony.
12. If you change your name when divorcing, remember to contact the Social Security Administration and get a corrected card. Otherwise, your next tax return will probably be rejected and, if applicable, your tax return delayed if your name on your tax forms isn't the same as the name on your social security card.
13. According to the IRS, if you have a capital gain from the sale of your primary residence, you may qualify for a deduction of $250,000 if your filing status is single or up to $500,000 if you file a joint return with your spouse. More information can be found in Topic No. 701 Sale of Your Home on www.irs.gov.
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