According to the IRS website: you are jointly and individually responsible for any tax, interest, and penalties due on a joint return for a tax year ending before your divorce.
Final tax advice and decisions that affect taxes should be made after consultation with an accountant. Treatment of tax issues is only made from the perspective of a family law attorney who makes no representation of being an expert in tax issues. However, there are a number of important things to keep in mind when considering taxes and divorce.
Tax Returns: Married persons have a number of options when considering how to file taxes. They include married filing jointly, and married filing separately. When persons are divorced, they are, obviously, unmarried. The ability to file jointly ceases.
Alimony: Alimony is money paid from the economically independent spouse to an economically dependent spouse. From a tax perspective, alimony is taxable income to the recipient and is a tax deduction for the payer. If parties file a joint tax return, the taxable significance of alimony is moot. If the parties file separate returns while alimony is being paid, the payee pays taxes on the alimony, and the payer deducts alimony from his income.
Child Dependency Deduction: The ability to deduct a child on a tax return is worth some money. Exactly how much is affected by the income of the parties. The primary custodian has the right, in the eyes of the IRS, to claim the child as a dependency deduction. The parties may agree however, to alternate the deduction from year to year, or to allow the non-custodian parent to claim the deduction.
Retirements: Often, retirements are divided in a divorce situation. If the owner of the retirement account were to draw money out of the account to give to his spouse, there would be significant tax and penalty issues associated with that withdrawal. Consequently, there are particularized orders that allow us to move retirement money without tax and penalty consequences.
Mortgage Interest Deduction: When parties begin to file separate returns, but may still own a home together, who gets the deduction? Generally, the party paying the mortgage will get it, but the parties may agree to split the deduction or make some other arrangement.
Even under the best of circumstances, taxes can be complicated. It is important to keep detailed records, including dates and amounts of payments made and payments received, to assist in resolving any disputes. As with other areas of divorce, it’s vital to get the guidance of an experienced and knowledgeable professional. For more information on important legal details surrounding your divorce, please contact Linda Sorg Ostovitz at firstname.lastname@example.org or telephone (301) 575-0381.
ABOUT LINDA SORG OSTOVITZ
Linda Sorg Ostovitz is a family law attorney. Her legal experience spans more than 34 years. In this time, she has served as a leader, educator and advocate. Mrs. Ostovitz holds a prestigious fellowship in the American Academy of Matrimonial Lawyers. Currently, she serves as President for the Business Women’s Network of Howard County, by which she was chosen Woman of Distinction for 2014. Mrs. Ostovitz represents clients in Howard, Anne Arundel, Carroll and Baltimore Counties. Her practice focuses exclusively on divorce litigation and mediation, child custody and access, child support, alimony, business valuation, as well as property and asset distribution. In addition to providing legal representation in court, Mrs. Ostovitz provides mediation services to help families come to a fair and legally-sound conclusion outside of the traditional court proceedings.
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