1. What is my filing status? (Married, Single, Head of Household)
Marital standing at year end determines your filing status for the whole year. If you have a resolve of divorce or separate maintenance, signed by a judge, you should file as single. Regardless of whether you have a signed resolve you may be able to file as head of household. Filing as head of household may cut your revenue tax obligation, but to qualify the following conditions must be met:
o You paid more than ½ the cost of retention up your home for the tax year,
Irs 1040 Es
o Your home was the main home for your child for more than ½ the year, and
o Your spouse hasn't been a member of the household for 6 months.
If you can't file as singular or head of household, then you must whether file as married filing joint or married filing separate.
6. Should my spouse and I file as married, filing separate or married, filing joint?
Filing joint may furnish some tax benefits over filing separate. However, by filing separate the Irs can't hold you responsible for any unpaid taxes caused by your spouse's actions or omissions. The "innocent spouse" rule provides relief from this responsibility in some cases.
2. Is alimony taxable?
In general, alimony is chargeable to the recipient (line 11 of the 2004 Form 1040) and deductible to the payor (line 34a of the 2004 Form 1040). However, some couples stipulate in their divorce business transaction that the alimony won't be deductible to the payor, or chargeable to the recipient.
3. Is child withhold taxable?
No. Child withhold is neither chargeable to the recipient nor deductible to the payor.
If the payor owes both alimony and child withhold but pays less than the total amount owed, the payments apply first to child withhold and then to alimony. If the divorce business transaction doesn't quote separate alimony and child withhold payments, normal "family support" payments are treated as child withhold for tax purposes, unless the alimony qualifications are met.
4. Who gets to claim the dependency exemption for the children?
In general, as long as the parents combined contribute at least ½ of the withhold of the child, the custodial parent gets the dependency exemption for the child. If custody is split or undeterminable, the parent who had corporal custody for the greater part of the year gets the dependency exemption. Custodial parents can waive their right to the dependency exemption by filing Form 8332.
5. Who gets to claim the Child Tax prestige and the Household and Dependent Care credit.
Only the parent who claims the exemption for the child may claim the Child Tax prestige for that child. Unlike the exemption, it can't be traded. If you are the custodial parent, you can claim the Household and Dependent Care prestige for the child even if you cannot claim the child's exemption. If you are the non-custodial parent, you cannot claim the Household and Dependent Care prestige for the child even if you can claim the child's exemption.
7. Are my divorce costs deductible?
In normal legal fees are thought about personal expenses so they aren't deductible.
However legal fees paid to get alimony and legal fees regarding the tax effects of divorce are deductible. The attorney must allocate fees paid for deductible and non-deductible services otherwise the deduction may be disallowed. The allowed deduction is a miscellaneous itemized deduction which is deductible only to the extent that, in the aggregate, the miscellaneous deductions exceed 2% of the taxpayer's adjusted gross income.
8. My spouse and I are using the married, filing separate filing status. Can I use the approved deduction if my spouse itemizes?
No. If spouses are using the married, filing separate filing status and one spouse itemizes their deductions, the other spouse must itemize as well.
9. Who gets the mortgage interest deduction and other itemized deductions?
If the marital home is owned by one spouse alone, only that spouse may claim a mortgage interest deduction. Deductible expenses that are paid out of separate funds, such as curative expenses, are deductible by the spouse who pays them. In general, deductible expenses paid out of joint funds are split 50/50 in the middle of the spouses, including mortgage interest. Mortgage interest for asset titled by the entireties can be claimed by whichever spouse in effect paid the expense.
10. Where can I go for more facts about divorce and tax issues?
http://www.rosendivorce.com/taxes
Jessie Danninger is a financial analyst with Rosen Divorce. She assist clients in all financial matters relating to divorce, including asset distribution, child custody, alimony, and tax associated issues. She is a certified divorce financial analyst and Cpa.
With offices in Raleigh and Charlotte, Rosen divorce is the largest divorce firm in North Carolina. Founded in 1990, the firm is dedicated to providing private growth and withhold to couples seeking divorce by helping them move forward with their lives. Our staff of attorneys, accountants, and specially trained divorce coaches expertly address the complex issues of ending a marriage. Our innovative arrival acknowledges that divorce is so much more than just a legal matter. Specialties contain child custody, alimony, asset distribution, divorce agreements, and domestic violence relief.
For more facts on Rosen Divorce, or for an interview, please contact:
Alison Kramer, Director of communal Relations, Office: 919-256-1542, Cell: 919-523-7104 akramer@rosen.com
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