How Divorce Affects Your Taxes
Preparing and filing taxes may feel especially overwhelming if you’ve recently gone through a divorce or are in the midst of one. You may be asking whether you should be doing your taxes alone or with your ex and what expenses you can claim.
These and other questions can have unique answers for divorced people working to disentangle their finances from each other. To help, here are answers to some questions for you to consider as you prepare to file your taxes.
Can I file a joint return with my ex?
The answer to this is simple and depends on your marital status as of Dec. 31 of the previous year. If you were still legally married that day, you can file a joint tax return for the year. If you prefer not to file a return with your ex, you can file separately but may need to communicate about income and deductions with each other.
If your divorce judgment was finalized on or before Dec. 31, you are considered divorced for the entire year — at least for tax purposes — and cannot file jointly.
How do I pay taxes on divided property?
With regards to property ownership, if you split what you owned between the two of you, there is nothing to be taxed. However, if you bought or sold property as part of the divorce, there could be tax consequences.
For example, if you sold property you owned as a couple and made money off the sale, you may need to pay capital gains tax. It can get complicated when you factor in how long you owned something and how much it was worth when you bought it, so check Internal Revenue Service rules to see what applies to your property.
Is alimony tax deductible?
Before 2019, spousal maintenance was tax deductible for the person paying it, which meant the person receiving it had to pay taxes on the amount. That is still the case for anyone with an agreement dated prior to 2019, according to the IRS.
However, if you were divorced in 2019 or later, or made a new agreement since that time, that policy has changed.
“Beginning on January 1, 2019, those paying spousal maintenance will no longer be eligible for a federal tax deduction on those payments,” according to local law firm DeShon Laraye Pullen PLC. “Recipients, meanwhile, will no longer be required to pay taxes on any spousal maintenance they receive.”
Is child support deductible?
In short, no. Just like married couples cannot deduct the money they spend on their children, divorced couples cannot deduct the money they spend on child support.
Who claims what money when it comes to taxes in a divorce situation?
It doesn’t matter who earned money while you were married, as both of you split that amount equally when filing taxes.
“In community property states like Arizona, the income earned by a couple is considered earned by both of them,” DeShon Laraye Pullen says. “Thus, one half of the income earned by a spouse while married is considered the income of the other, whether they file jointly or separately.
Are legal fees deductible?
For the most part, the answer is no, but there are a few exceptions. For example, if you received tax advice connected to your divorce or paid fees to figure out alimony, you can claim those as miscellaneous deductions. Your deductions can add up to no more than 2% of your adjusted gross income.
Navigating through the legal intricacies of divorce can be tricky, which is why an experienced attorney can be your lifeline. For more information and to schedule an appointment, visit DeShonPullenLaw.com or call (602) 252-1968.