If you’ve recently divorced or separated from your spouse, here are a few things you should know for
upcoming tax season:1.What is my filing status? (Married, Single, Head of Household) Marital standing at year end determines your filing status for entire year. If you have a decree of divorce or separate maintenance, signed by a judge, you should file as single. Regardless of whether you have a signed decree you may be able to file as head of household. Filing as head of household may reduce your income tax obligation, but to qualify following conditions must be met: oYou paid more than ½ cost of keeping up your home for tax year, oYour home was main home for your child for more than ½ year, and oYour spouse hasn’t been a member of household for 6 months. If you can’t file as single or head of household, then you must either file as married filing joint or married filing separate.
6.Should my spouse and I file as married, filing separate or married, filing joint? Filing joint may provide some tax benefits over filing separate. However, by filing separate IRS can’t hold you responsible for any unpaid taxes caused by your spouse’s actions or omissions. The “innocent spouse” rule provides relief from this responsibility in some cases.
2.Is alimony taxable? In general, alimony is taxable to recipient (line 11 of 2004 Form 1040) and deductible to payor (line 34a of 2004 Form 1040). However, some couples stipulate in their separation agreement that alimony won’t be deductible to payor, or taxable to recipient.
3.Is child support taxable? No. Child support is neither taxable to recipient nor deductible to payor. If payor owes both alimony and child support but pays less than total amount owed, payments apply first to child support and then to alimony. If separation agreement doesn't delineate separate alimony and child support payments, general "family support" payments are treated as child support for tax purposes, unless alimony qualifications are met.
4.Who gets to claim dependency exemption for children? In general, as long as parents combined contribute at least ½ of support of child, custodial parent gets dependency exemption for child. If custody is split or undeterminable, parent who had physical custody for greater part of year gets dependency exemption. Custodial parents can waive their right to dependency exemption by filing Form 8332.
5. Who gets to claim Child Tax credit and Household and Dependent Care credit. Only parent who claims exemption for child may claim Child Tax credit for that child. Unlike exemption, it can’t be traded. If you are custodial parent, you can claim Household and Dependent Care credit for child even if you cannot claim child’s exemption. If you are non-custodial parent, you cannot claim Household and Dependent Care credit for child even if you can claim child’s exemption.
