Tax day is almost here and many individuals might feel the impending stress of filing them on time. However, if you are going through a divorce, taxes may feel even more complicated than they originally did. At Chung & Ignacio, Attorneys at Law, we want to help alleviate some of the frustration that divorce can cause. We have compiled key things you should know about divorce and taxes.
The day you receive your final divorce decree plays a large role in how you can file your taxes. If you are still legally married before December 31, you and your ex can still claim joint returns. Many couples choose to do so to obtain the benefits available. They cannot do so after the divorce, though. If the divorce occurs before the end of the calendar year, you must either file as Head of Household or single.
Child Support and Exemption
Child support is neither taxed nor is it tax deductible. The state views the payments as a responsibility of the parent to their child. Because only one parent can claim dependency of their child, the custodial parent can usually claim tax exemptions. Only in few instances are there exceptions to this rule, where the exemption can be traded to the noncustodial parent through IRS Form 8332.
Unlike child support, alimony can be taxed. The individual receiving the alimony must report it as income. The party who must pay spousal support can receive a tax deduction. However, to qualify for tax deduction, the two parties cannot share the same residence.
Head of Household
Individuals may opt to file as the “head of household” in order to reduce their tax bill. To do so, they must meet certain requirements.
These factors include:
- Maintaining the household for the children
- Being a U.S. citizen for the entire tax year
- Providing over half the cost to maintain household
- Living apart for more than six months or being unmarried until the end of the year
Assets transferred during the divorce will not be taxed. However, if a spouse receives property from their ex and later decides to sell it, they will be liable for capital gain tax.
Divorce can be complicated, particularly when you need to deal with taxes as well. Contact our Rancho Cucamonga divorce attorneys for legal counsel. We prioritize your needs and help ensure your rights are protected.