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Basic income tax rules still apply after a divorce

There are several important and fairly common tax consequences of a divorce. For one thing, the recent divorcee may want to keep in mind that if the divorce is finalized at any time prior to the end of the year, the IRS views the taxpayer's status as single for the whole year. This means that a Florida resident who has been granted a divorce prior to the end of the year may file his or her personal income tax return by the April 15 deadline in the status of either single or head of household.

Due to the head of household status having certain tax advantages, that is generally the one to choose. However, there are other qualifications that must be met. The taxpayer must have paid more than 50 percent of the cost of maintaining a home for the year, and a qualifying dependent must have lived with him or her for more than half the year.

With respect to dependency exemptions for minor children, the custodial parent is recognized as being the recipient of those. However, it is not uncommon for divorcing parties to negotiate another outcome as part of the settlement agreement. Remember to use the correct form to effectuate transfer of an exemption to the other spouse. Another common tax rule is that alimony is considered as income for the receiver and as a deduction for the payer.

Child support, on the other hand, is just the opposite, and it is viewed as non-income for the recipient, and it results in no deduction for the payer. The alimony rules for tax purposes are often discussed and agreed upon during divorce negotiations. A related issue often is whether property division payments that are being paid in installments may be structured in a legally appropriate manner to render tax benefits to one or both spouses. At this point, the issues become so complex that it is advantageous to have the ready assistance of both one's accountant and family law attorney to obtain an effective settlement under both Florida law and federal tax laws. 

Source: credit.com, "The Tax Deductions You May Qualify for After a Divorce", Karin Price Mueller, Oct. 28. 2015

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The Law Office of Gustavo E. Frances, P.A.
200 S.E. 6th Street, Suite 402
Fort Lauderdale, FL 33301-3424

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