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Divorce and Taxes – Tax Implications Of Divorce

July 18, 2014 | By More

Divorce and Taxes

Divorce and Taxes

Divorce, already emotionally stressful, can also wreak havoc on your finances. It’s easy to overlook the tax implications of a divorce while dealing with the emotional parts. Taxes after divorce present a myriad of issues from tax filing status to alimony.

Linda Smith, Enrolled Agent and Certified Divorce Financial Analyst, lays out some commonly overlooked divorced tax issues:

Linda: Are you confused? This is probably the way your pending or final divorce feels when you are trying to figure out the tax implications. There are several tax considerations that should be addressed. Here are some of the most commons ones:

  1. Have you changed your filing status with your employer? The federal tax withheld from your paycheck will need to be adjusted so you are not caught short at tax time.
  2. Is this the year you or your ex-spouse may claim the children as has been agreed to?
  3. Did you report any alimony (not child support) as income if you are the recipient? Or if you are the payer, did you take your alimony payments (not child support) as a deduction?
  4. Is there real property (not just the marital home) that you still need to consider for who claims the real estate interest and/or property taxes?
  5. Be sure as part of your overall tax planning, you share your divorce planning or divorce decree with your tax professional. If you missed anything on a prior year remember, there is (generally) a 3 year statute of limitations that allows you to amend your return.
  6. Are you an Innocent or Injured Spouse according to the Internal Revenue Service? It is important to know the difference and how it can help you especially if you feel pressured to sign a tax return.

Divorce is a major life changing event. Don’t forget it can also have a major impact on your tax return.

Linda Smith

Contributed by Linda D Smith, Certified Divorce Financial Analyst – EA, ATA, ABA, CDFA, CFR, DMM
ATI Professional Services Inc is located in Orlando, Florida. For more information or to contact Linda D Smith, Certified Divorce Financial Analyst, visit http://www.atipro.com

Article information should not be used exclusively to make legal, financial or tax decisions. Because laws and rules can change frequently, topics may not always be updated to reflect these changes or may not apply to your unique situation. It’s prudent to seek out the advice of a professional for your specific needs.

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Category: Personal Finance, Taxes

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