Time magazine published a very interesting article about this subject titled, “Divorce and Taxes: Five Things You Need to Know.” Below is a summary of some of the key points that will hopefully shed some light on your situation:
- Use the calendar year when determining your marriage status. It doesn’t matter if your divorce became final sometime between the first of the year and tax day, because you might still be viewed as a married couple in terms of your taxes. For example, if your marriage was dissolved on February 3, 2011, you would still be considered married as far as your 2010 taxes are concerned.
- You might be considered “head of household.” You aren’t limited by claiming single or married, as there is a third option – head of household. If you are in the process of getting divorced, you may qualify for this status. The good news is that this option could save you money.
- Your children might not be dependents in the eyes of the IRS. Deciding who gets custody of the children and how often they spend with each parent is no longer a cut and dry issue. There are many unique arrangements made in regards to child custody. For the most part, you are only allowed to claim your children as dependents if you are the custodial parent identified by court order. If you don’t have a court order, generally you would be considered the custodial parent if your children lived with you for most of the year.
- Spousal support makes for a good deduction. Spousal support, also referred to as alimony or spousal maintenance, is considered an above-the-line deduction. What does that mean to your tax bill? It means you don’t have to itemize deductions in order to take advantage of the tax savings.
- The house won’t come tax-free. If the house is yours after the divorce and you decide to sell it, you could be slapped with capital gains taxes. A married couple doesn’t have to pay taxes on a gain of up to $500,000 on the sale of their primary residence. However, single people only are exempt up to $250,000.
Of course, you should always consult with an experienced tax professional when it comes to divorce and taxes. An accountant or knowledgeable tax preparer will be able to explain the IRS rules and any resulting tax liabilities you might face.
Get the Help You Need From Experienced Arizona Family Law AttorneysIf you need help with a family law matter, contact an experienced Phoenix divorce lawyer at the law firm of Curry, Pearson & Wooten by calling 602-258-1000 or toll free at 1-888-9AZLAWCOM (888-929-5292). You can also fill out our online form.
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