If you are a divorced or separated taxpayer, you face unique challenges when filing your income taxes. Myriad tax issues need to be resolved before you mail your return to the Internal Revenue Service.
“Themost important decision for a divorced or separated taxpayer to make is to decide whether to file as married, single or head of household,” said Alan Stokes, a certified public accountant with Century Accounting & Financial Planning in Timonium.
“Unfortunately, many of the newly separated or divorced are focused on other areas,” said Jessie Danninger, a CPA with Raleigh, N.C.-based Rosen Law Firm. A person’s marital standing at the end of the year determines their status for the entire year, Danninger said.
“If you have a decree of divorce or separate maintenance, signed by a judge, you should file as single,” she said.
Whether you have a signed decree or not, you may still be able to file as a head of household. But in order to qualify, you must meet the following conditions:
» You paid more than half of the cost of keeping up your home for the tax year.
» Your home was the main home for your child for more than half of the year.
» Your spouse hasn’t been a member of the household for six months.
The next biggest issue facing taxpayers with children is who gets to claim the dependency exemption.
“As long as the parents combined contribute at least one-half to the support of the child, the custodial parent gets the dependency exemption,” Danninger said.
If custody is split or undetermined, the parent who had physical custody for the greater part of the year is entitled to the dependency exemption.
Most divorce expenses are not tax-deductible. “However, legal fees paid to get alimony and legal fees regarding the tax effects of divorce are deductible,” Danninger said.
