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How your divorce affects your income taxes

Tax season is upon us in Tennessee and the rest of the nation. If you have recently gone through divorce, you will have to take extra care when preparing your income tax return this year. That’s because divorce affects income taxes in several ways.

The most obvious way a divorce affects income taxes has to do with your filing status. Because there are tax benefits that apply to married couples filing together, many people want to file “jointly” as long as they can.

Technically, your filing status is determined by your marital status as of December 31, 2013 when filing last year’s income taxes. That means if you were going through a divorce in 2013 but it was not finalized until January 2014 or later, you still have the option to file jointly.

Another tax issue that commonly arises after a divorce is the dependent exemption for children. Only one parent is allowed to claim a child as a dependent. It may be easy to determine which parent gets the deduction when one parent has primary custody, but it can be more difficult to determine when parents share joint custody.

According to the IRS, the parent who has custody of the child more than 50 percent of the time gets to claim the child as dependent. However, that parent can waive the right in writing. This commonly happens when the parents decide during the divorce that the other parent will take the child exemption or they decide to trade off taking the exemption.

Finally, it’s important to keep in mind that, generally speaking, spousal support (alimony) payments are tax deductible for the paying spouse and taxable income for the receiving spouse. However, child support payments are not tax deductible for the paying parent, nor are they taxable income for the receiving parent.

Talk to your divorce lawyer for more information about how your divorce will affect you this tax season.

Source: Liberty Tax Services, “The Tax Implications of Going Through a Divorce,” last accessed Feb. 12, 2014