Divorce and Taxes

If death and taxes are a given, so is the desire to avoid paying taxes. Not evade. Evading taxes is illegal. Avoiding taxes -minimizing the amount you legally must pay- is, in contrast,  entirely proper.

The impact of divorce on taxes

Divorce can present challenges to a couple with respect to taxes, for multiple reasons.

It is not uncommon that one spouse took care of tax preparation for years, leaving the other spouse at, if not a loss, potentially a disadvantage when it comes to examining the issue of taxes in the context of a divorce.

Further, divorce may impact your filing status (if you are divorced, obviously you will not be filing as “married filing jointly” any longer, but if you are legally separated, what are your options?*). Filing status is a critical consideration as it may influence the amount of taxes you owe.

Support payments can impact taxes as well. Spousal support payments (i.e., maintenance or alimony) may be deducted from the payor’s gross income thereby reducing the tax burden. Alimony would be considered income to the payee (the spouse receiving they payment), thereby increasing his or her tax liability. Child support, in contrast, is treated differently. Not taxable, it neither serves as a deduction for the payor nor is taxed as income to the payee.

The children themselves, in turn, are not only the joys of our lives, but they also can help to provide a substantial tax benefit vis-a-vis child tax credits (potentially worth up to $1000 per child in 2011) and dependent exemptions. Determining which parent will make use of which tax benefits associated with children is often an issue that is negotiated during a divorce mediation.

Because there are potentially many tax implications of a divorce, it is advisable to consider them carefully and get all the facts out on the table with your divorce mediator, before you make decisions that could have a real impact on your wallet or pocketbook.

Divorce related tax forms and publications

You may find the following tax publications which touch on divorce and divorce-related topics of use:

• IRS Publication 504 (2011), Divorced or Separated Individuals
• IRS Publication 972 (2011), Child Tax Credit
• IRS Publication 501 (2011), Exemptions, Standard Deduction, and Filing Information
• IRS Publication 929 (2011), Tax Rules for Children and Dependents
• IRS Publication 971 (09/2011), Innocent Spouse Relief
• NYS Tax Form IT 285 (2011) Request for Innocent Spouse Relief

Additional tax information

• IRS tax forms and publications
• NYS tax forms and publications

* Tax filing status options for a separated spouse may include: single, married filing separately, or head of household.

Tax forms or publications on this site may be dated. You should check the IRS and NYS Department of Taxation and Finance sites for the most current versions. This website does not provide tax advice. For tax advice, you should seek the counsel of a tax advisor.