Tax questions to discuss with your attorney
With the federal income tax filing deadline just a few weeks away, we find it prudent to write a post on the various tax issues that can come about when people are getting divorced. Indeed, divorce can be a stroll in to uncharted waters with regard to a number of financial issues, but it is tax time that may scare people the most.
This is likely because of the horror stories some ex-spouses may learn about. For example, the husband, or wife, who had been cheating on their taxes for years, only for the innocent spouse to learn about it through an IRS audit. Or the spouse who initiated a divorce in March of last year only to have it finalized in January of this year, but lived separately for the majority of the year and wants to know what his or her tax filing status would be.
Another point of confusion may be linked to whether alimony or spousal support should be deductible for the spouse paying such support; as well as whether support payments should be considered income for a spouse receiving it. In the same vein, questions also arise as to whether child support payments follow the same protocol.
For divorcees with children, the child tax credit and the dependent care credit could be hotly contested, especially when parents have joint physical custody of a child. In some situations, a change in circumstances will prompt a child to be moved from one household to another, which further complicates the tax credit discussion.
For all these issues, working with a family law attorney with tax experience will be helpful.
Source: DentistryIQ.com “Important considerations for the couple going through a divorce: Part 1,” Theodore Schumann, Mar. 15, 2014