This is a two part blog series regarding Taxes and Divorce. This second blog post discusses common deductions and challenges divorced individuals face.
Our last post discussed common issues and solutions that divorcing individuals face when filing their taxes. Today, we will discuss two topics which can affect a client's taxes post-divorce.
The first scenario involves deductions. Clients approach me because over the last 5, 10........ I have even seen 12 years plus they have not claimed their child(ren) as dependents on their taxes. These are individuals that have religiously paid child support, exercised their parenting time, and yet for some reason have never claimed their child as a dependent. Sometimes people avoid the conversation with their ex-spouse because it causes to much tension, unnecessary fighting. Yet, the tax benefit that these individuals have been "missing out on" adds up over the years. While every state and county is different, typically a non custodial parent, in good standing, is entitled to claim their child every other year. Even more shocking is some individuals have no idea that they are even entitled to such a benefit. The ideal situation is to lay out how dependents will be claimed in a separation agreement or divorce decree. If by chance it was not agreed upon there is legal recourse available.
The second inquiry in our office regards how to treat alimony payments. While alimony is rarely ordered, it is an important to understand for tax purposes. Alimony, unlike child support, can be deducted by the payer and must be claimed by the payee. It is important to record alimony payments and to consult with tax professionals to understand what qualifies as alimony. There are certain transactions between ex spouses that do not qualify as alimony and therefore cannot be claimed by the payer. Understanding how a payment is classified in a divorce decree can impact the payer for years to come.
If you have questions regarding divorce, how your divorce may impact your taxes, or are ready to begin the process our office is here to help. Our experienced divorce attorney is able to answer any questions you may have about a divorce's impact on your taxes and finances. When you are ready please contact our office at 859-982-9557 or [email protected]