It’s officially tax season, and anyone getting a divorce should know how taxes may affect you. There are several things to consider with taxes, especially with the new Tax Cuts and Jobs Act of 2017. These include how it affects support payments, when to file jointly, and how to claim dependents.
Divorce and income taxes are intertwined.
In other words, they affect each other.
Let’s start with the basics: If your divorce case is still pending and a new year (like 2018) has started, then you can file jointly. For many couples, this may save them money. However, if you finish your divorce in December of a given year, then you have to file single. Some couples wait to have their final hearing so that they can file a joint return. Making this decision may require input from your accountant.
Next: both the husband and wife are responsible for any joint tax debt, unless they agree otherwise. However, a transfer of assets between spouses is not considered a gain if it’s part of a divorce. This includes the marital home, retirement accounts, and other assets. It’s useful to consider the tax consequences of any transfer of assets between two spouses.
Retirement accounts should be kept if possible, unless you are old enough to draw from it without a penalty. If you’re not 59 1/2, which is the typical age in which penalties are no longer taken, then you can rollover the fund from your spouse’s account. This will avoid penalties and taxes, but the funds are not readily available.
Knowing how alimony and child support are treated is also important.
Historically, child support has not been taxed, while alimony is taxable. However, under the new Tax Cuts and Jobs Act of 2017, alimony payments will no longer be deductible, for those in a divorce starting next year. Finally, spouses with children will need to address who claims the kids on his or her taxes. The parent with whom a child lives primarily (more than 6 months) typically gets to claim the child. However, Florida law provides that the Court can order a parent to sign a waiver so the other parent can claim the child.
Learn about what the new Tax Law can mean for your divorce case in this short video:
These are the basics in any divorce when it comes to income taxes. As you can see, it’s important to consider how taxes affect you in a divorce. Know your rights, and consider all options.