Divorcing a spouse causes a lot of change, including the way you file taxes. Once you have finalized your divorce, your filing status will return to single, and you will need to immediately update your W-2 with the proper deduction amounts. Additionally, a number of tax breaks may apply to you.
If you need a Westchester County divorce lawyer, look no further than Friedman & Friedman, Attorneys at Law. Call (914) 873-4410 now.
Possible Tax Breaks
Alimony and Child Support: If you are paying alimony to your previous spouse, the amount is tax deductible. If the amount paid is not designated in the divorce agreement, it is not deductible. Additionally, child support is not deductible.
If you are receiving alimony due to your divorce agreement, you must claim this as additional income on your taxes. However, child support is not taxable income.
Dependent Child: Only one parent may claim a child as a dependent per year. Unless otherwise agreed upon, the custodial parent will claim the child, and may qualify for a $1,000 tax credit.
Parents can alternate claiming their child(ren) for tax purposes. When doing so, the parent must file the appropriate IRS documentation (Form 8332) stating that the custodial parent agrees not to claim the child that year.
Legal Fees: Typically, divorce costs are not deductible, however, there are exceptions. The amount of time a divorce lawyer spends on tax-focused areas, such as alimony or dependency exemptions, is tax-deductible. Ask your attorney to supply an itemized invoice that clearly states this designated cost.
Medical Expenses: If you continue to pay medical bills for your child after a divorce, even if you are not the custodial parent, the amount paid is tax deductible.
Property Transfer: If your spouse transfers property to you in a divorce, you are not accountable for paying taxes on that property. However, the property’s tax basis shifts to you, meaning you will be held responsible for the capital gains tax.
Property Sale: If you sell your home before the divorce is finalized, you and your spouse can jointly avoid up to the first $250,000 of taxes on the property. If the sale occurs after the divorce is final, you and your former spouse can individually exclude up to $250,000 in financial gain from the sale on each of your returns. These exclusions are only possible if you own the home and lived in it for at least 2 of the past 5 years.
If you were awarded the house as a marital asset from the divorce, and you sell it years later, you may exclude up to $250,000. If it is sold after your divorce, but you did not live in it for 2 years, the amount you can exclude will be tied to the amount of time you lived in the home. For example, you can exclude up to $125,000 if you lived in the home for only 1 year.
Knowledgeable Divorce Representation
If you need a divorce lawyer in Westchester County, look no further than Friedman & Friedman, Attorneys at Law. Our experienced divorce lawyers can help you through the legal details of your divorce, including all tax-related matters. We provide compassionate and knowledgeable support to you throughout the process.
Contact our Westchester County divorce lawyers today at Friedman & Friedman, Attorneys at Law: (914) 873-4410.