Filing jointly or separately
Getting divorced often means changes in the way you fill out your tax return. You will be able elect among filing a joint return, a married separate return and a separate return depending on your marital status as of December 31st, regardless of the date you file your taxes. If you were divorced before December 31st, then you may be able to file as a head of household, which gives you better deductions and tax brackets, as long as you had (i) a dependent with you for at least half the year and (ii) you paid at least half of the maintenance of your residence.
Claiming children as dependents
A divorce decree may give child custody to one parent and visitation to the other or parents may have joint custody. In order to list your child as a dependent, your child must have lived with you for more days than your spouse over the course of the year, according to a TurboTax/Intuit blog. This makes you the â€œcustodial parent.â€ You can give up the tax dependency status to your spouse or ex-spouse if it is done in writing. IRS Form 8332 allows the other parent to claim the child. Ask an accountant if that is right for you.
If you are divorced, but you are paying part or all of your childâ€™s medical bills, then you can deduct those expenses on your tax return even if you are not the custodial parent. Additionally, a parent can only claim child care as a work expense if that parent is the custodial parent.
Alimony and child support
If you pay alimony and it was ordered officially in your divorce decree, then you get a deduction. Your ex-spouse who is receiving alimony has to pay income taxes on that amount. Child support is the opposite: no deduction can be taken for paying child support and it is not taxed by the parent receiving it.
Retirement and pension
If you have a 401(k), an IRA or pension plan, then it is important that you consult with an attorney for divorce. If you simply take money out of your 401(k) and give it to your spouse, that money will be taxable. If you have a Qualified Domestic Relations Order (QDRO), then your spouse can receive money from the 401(k) without additional taxes. Also, if you plan to transfer an IRA, then be sure it is in the divorce agreement. Otherwise, the owner may be taxed as if the IRA was distributed.
At Jayson Lutzky, P.C., we stay current with the latest developments in the law. Jayson Lutzky has over 30 years of experience practicing law in New York State. He handles uncontested and contested divorce cases as well as family court matters. Call 718-239-9500 to set up a free in office consultation or visit www.MyNewYorkCityLawyer.com for more information.