Taxes and Divorce

As April 17, 2018 inches ever closer, you may find yourself directing your attention towards your taxes.  If you have divorced recently, you may have new tax questions this year.  At Eric C. Cheshire, P.A., we understand how the first tax filing after divorce can feel overwhelming.  Here’s a starting point for tackling this year’s taxes.

Know Your Filing Status

The Internal Revenue Service (IRS) has a bright line rule about marital status.  If you were divorced before midnight on December 31 of 2017, you will file separately.  Of course, if you are the custodial parent, you may qualify for head of household status.  However, even if you were married for 363 days in 2017, your completed divorce at the end of December takes you out of the “married” filing status.

On the other hand, if you were still married on December 31, 2017, your choices are “married filing jointly” or “married filing separately.”

Understand What is and is not Income

When calculating your income for tax purposes, recall that child support and alimony are treated differently.  (This is subject to change next year, but only for those that complete their divorce in 2019 or beyond.)  Currently, child support is not considered income to the recipient.  Nor is it deductible for the parent who pays child support.  Conversely, alimony is considered income for the person who receives it.  Alimony payors may deduct alimony from their income calculations in most situations, however, alimony is a bit more complicated for tax purposes.

Dust off that Divorce Decree

You may not remember it, but your divorce decree most likely details who may claim the children for the tax exemption.  In the unlikely event your decree fails to address this, the parent who has the child the greatest number of days during the past year is entitled to the exemption.

Don’t Forget about Child Care

The parent who has the majority of time-sharing is allowed a child care tax credit.  In order to qualify for the child care tax credit, in addition to being the parent with the majority of time-sharing, the child must also be under the age of 13, and the costs for child care must be “work related.”

Review Your Legal Fees

Most of the legal costs associated with your divorce are not tax deductible.  However, some are.  Fees you pay specifically for advice about the tax consequences of your divorce are deductible on Schedule A of your tax return.  Take the time to evaluate your legal bills to determine the appropriate amount. 

Talk to Your Former Spouse

If you were still married on December 31, 2017, and are filing a joint return, have a discussion with your former spouse/other parent about any tax refund.  Make sure both of you are on the same page about how the tax return will be divided – before the tax return arrives.

If You Are Considering Divorce

If you are considering divorce, contact Eric C. Cheshire, P.A.  Mr. Cheshire focuses exclusively on family law matters, including divorce, child support, alimony, child custody and time-sharing.  With over 25years of experience, Eric C. Cheshire, P.A. has the experience you need to deal with your specific situation.  Contact us today.

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