Notice: DUE TO COVID-19, CONSULTATIONS ARE AVAILABLE VIA PHONE OR VIDEO conference AND consultation FEES ARE TEMPORARILY WAIVED. CALL TODAY!

Divorce and Income Taxes

In the rush to get their Pasadena divorce finalized, many people fail to think about the implications of divorce on their income tax obligations. However, it is a good idea to be informed of the ways divorce can potentially affect your tax liability so you're not caught off guard when it's time to file your return.

If you're not legally divorced, you are not allowed to file your taxes as a single person. If you are currently separated and in the process of getting a divorce, you are allowed to file as either married filing separately or jointly. You are allowed to choose what status would be most advantageous to your situation. Once you are legally divorced and have lived apart for at least six months of the taxable year, you may qualify for head-of-household filing status.

Alimony is taxable income for the person who receives it and a tax deductible expense for the person who pays it. Make sure the divorce settlement or judgment identifies the payments as spousal support to avoid any potential problems when filing your return.

Child support payments are not taxable income for the person who receives them or tax deductible expenses for the person who pays them. If you are ordered to pay child support and fall behind on your payment, the IRS may withhold your tax refund to pay the amount that is owed.

Another common question regarding divorce and income taxes is whether or not legal fees are deductible. Attorney fees for your divorce are considered a personal expense and thus not deductible on your tax return. However, you are allowed to deduct legal fees that are used to collect taxable income. This means that your legal fees may be deductible if you're seeking alimony from your ex.

Although a Pasadena divorce attorney can provide general guidance regarding some of the tax issues surrounding divorce, it is best to seek out the advice of an experienced accountant in preparing your return.

Categories