Getting a divorce can be a very emotional process.  Because of this, some people forget or don’t think about tax and divorce.  And that’s understandable.  However, it is really important to keep tax issues on your mind during the divorce process and discuss these issues with your attorney and accountant.   With that in mind, here are some common tax considerations.

First, consider your tax filing status.  Previously, you may have filed your taxes as “married filing jointly”.  What happens when you divorce? What is the filing status?  Your marital status for tax purposes is determined at the end of the year.  So, if your divorce is finalized by December 31, 2015, your tax status will be single for 2015 Federal taxes.  But, if your divorce is finalized just a few days later, such as January 3, 2016, you will be considered married for your 2015 taxes.  Being considered married during the year could make you incur additional tax liability.

Also consider that child support payments are not tax deductible.  This is because the parent paying child support is fulfilling their parental duties and not providing income to the receiving parent.  However, this is not true if spousal maintenance (alimony) is paid.  The paying party will be allow to deduct his or her payments.  Further, the party receiving maintenance is taxed on the money because it is considered income.

Another issue to think about is who gets to claim a child as a dependent on the tax returns?   Only one parent can claim the tax exemption during the tax year.  Normally, the parent who has the majority of time with the child will get to claim the exemption.  However, many parents agree to alternative the exemption every other year if parents have equal residential time with the child.

Finally consider property division consequences.  When a party receives property in a divorce, that party does not normally pay taxes merely for acquiring it.   However, the party gaining the property also gains its liabilities such as mortgage and back taxes.  And if a house is sold, the awarded spouse may later be liability for capital gains taxes.

Remember to always consult with an accountant for detailed tax information.  This article is meant to be a general guideline.  If you have any questions about taxes and divorce, contact Jeff Burleson at Burleson Law, PLLC today.  Jeff Burleson specializes in family law, and he serves the Kitsap County area and all surrounding areas.

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