The deadline for filing tax returns is just around the corner. As stressful as this time of year can be in any year, it can be particularly stressful if you are recently divorced or separated.
Divorce will likely affect several aspects of your taxes, from your filing status to various deductions you utilized in other tax years. In this post, we will take a brief look at the effect certain divorce-related payments can have on your taxes.
If you paid alimony or spousal support last year, those payments are generally tax deductible. If you received alimony or spousal support last year, you generally must report it as taxable income.
Keep in mind that this treatment of alimony will change next year, as revisions to the tax code will eliminate this deduction beginning Jan. 1, 2019.
Child support payments
Child support payments are not tax deductible for the payer and do not count as taxable income for the recipient.
Remember also that you could be eligible for certain tax credits and breaks if you are the primary physical custodian and in some shared custody scenarios. You can refer to (or discuss this when creating) your divorce agreement or parenting plan for guidance on claiming your children.
In some cases, it may be possible to deduct certain legal expenses. In general, legal fees are not deductible, but the cost of collecting alimony, preparing a tax return and securing retirement plan interests could be deductible for some people.
More information can be gathered from the IRS.gov webpage on filing taxes as a divorced individual.
It is crucial to understand that every case is different, and that the benefits of different filing statuses are best reviewed with your chosen tax professional. For specific guidance and answers on tax-related questions during and after divorce, consult an attorney and a tax professional.