From the Patrick Parker Realty Blog Series
Ways to Save Through Life’s Transitions: Divorce
In a prior blog post we gave you 12 tips on education, working and family life. This blog post continues with more tax tips to help you save through the major life event of divorce.
Tax Implications and Actions to Take After Divorce:
Before your divorce is final, copy all business tax returns for your spouse’s corporation or partnership. The IRS will not give you copies of your spouse’s business returns if you did not sign them.
1 Consider the tax implications of paying support. Child support is not deductible, but alimony is deductible to the payer and taxable to the recipient. If it’s rolled together into “family support” it is fully taxable to the recipient and deductible to the payer, just like alimony.Follow the 5Ds for alimony deductibility. To be deductible, alimony must be paid in dollars, under a decree or written agreement, and cease on your ex’s death. After the divorce, you must maintain your distance (you can’t live with your ex), and the payments can’t be designated as non-taxable or child support.
2 Keep a calendar of the days (and nights) your child spends at your house and at your ex-spouse’s. This will provide documentation for the courts and for the IRS (for dependency exemptions and head of household filing status).
3 Keep in mind that this is general information designed to help you put these valuable deductions on your radar. Patrick Parker Realty Agents and Realtors are not certified accountants. Please be sure to check with your tax adviser to see if you qualify for a particular credit or deduction.
Keep in mind that this is general information designed to help you put these valuable deductions on your radar. Patrick Parker Realty Agents and Realtors are not certified accountants. Please be sure to check with your tax adviser to see if you qualify for a particular credit or deduction.
Check back in with the Patrick Parker Realty Blog each Tuesday, Thursday and Saturday for more Tax Season Blog Series’ Posts and sign up for the monthly Patrick Parker Realty eNewsletter to have updates delivered to your inbox.
The Blog Series will cover many topics such as How do I qualify for a home seller break?, How do I qualify for a home buyer break?, Do I have to report the home sale on my return?, What is the gain on the sale of my home?, What Are Home Renovation Tax Credits?, Deducting Mortgage Interest, Taking the First-Time Homebuyer Credit, How to Avoid Taxes on Canceled Mortgage Debt, Tax Incentives as they relate to Life’s biggest transitions, such as Marriage, the Birth of a Baby, Divorce, or the death of a Spouse and much more. New posts in this Blog Series will be published twice weekly.
For more information about paying taxes on the sale or purchase of your home or any other questions you have about this article please speak with your tax professional or visit www.irs.gov.