SOME TAX-RELATED DIVORCE TIPS
These general rules are intended to alert you and provide general information. Before you sign any tax returns or take any actions with respect to your federal or state income tax returns, review your situation with your divorce lawyer and with your tax advisor.
- If both you and your spouse sign a joint income tax return, you need to understand that each of you could be held responsible for all of the taxes due.
- If you are separated from your spouse, do not sign or file a joint return without clearing it with your divorce lawyer and your tax advisor. Your divorce lawyer may want you to enter into a Tax Indemnification Agreement with your spouse, which would protect you in the event your spouse fails to report all of his or her income or fails to provide accurate information. If you had been using the same tax advisor before the separation, you may want to consider finding a new tax advisor or asking your spouse to do so. This is something you should discuss with your divorce lawyer.
- If you are having trouble securing past joint tax returns, you may get them directly from the Internal Revenue Service (I.R.S.) by completing I.R.S. Form 4506. Your divorce lawyer can assist you with this process.
- You may officially notify the I.R.S. that you have changed you mailing address from the address used on your last tax return by filing I.R.S. Form 8822. You should not do this without consulting your divorce lawyer and your tax adviser, as there may be circumstances under which this may not be appropriate.
- Spousal support or alimony is no longer taxable to the recipient spouse, nor deductible from the income of the payer spouse unless it is pursuant to an Agreement or Order prior to 2018.
- Child support payments are not deductible from the income of the payer spouse or taxable to the recipient spouse
- Generally, the custodial parent will be entitled to claim the dependency exemption on his or her income tax return. The custodial parent (that is, the parent who has custody) may execute I.R.S. Form 8332, releasing the dependency exemption to the non-custodial parent.
- Generally, there is no tax gain or loss recognized as a result of the division of property between spouses upon divorce. Thus, there is no tax incurred by dividing the property.
- It is important to know the “basis” of the property that you receive in the division of your assets. The “basis” is generally the cost of acquiring a capital asset. If the asset has appreciated, the person who receives that asset will be responsible for tax on the appreciation when the asset is sold.
- A person may qualify as head of the household for income tax purposes if he or she provides more than half the costs of a home for him or herself and a child or other dependent, and under other factual circumstances. Your divorce lawyer and your tax advisor should discuss this with you.