Time Magazine: Divorce and Taxes
The TaxGirl, Kelly Phillips Erb wrote a piece at TIME.com about divorce and taxes. While tax day just passed us by last week, it's an interesting piece and answers many questions that I often receive from clients.Here's a sneak peek at the 5 points in the article:
- Filing Status is based on the Calendar - not the date of your divorce decree. Basically, if you are divorced between January 1 and April 15, but you were married on December 31, you will be filing as "married" (either jointly or separately). But, if you get divorced in December you can't file as married, but you have the option of filing head of household (if you qualify) which could be beneficial.
- If you are awarded the marital home in the divorce you could be responsible for capital gains taxes when it is sold since you don't have the joint marital capital gains wiggle room.
- Just because you have the kids for equal time during the year doesn't make them your dependents for filing purposes.
- Alimony is tax deductible for the paying spouse and it is deductible even if you do not itemize your deductions each year.
- Child support is always tax neutral so no one gets a deduction or pays taxes for child support.
Check out the entire article here: Divorce and Taxes: Five Things You Need to Know