How Divorce or Separation May Affect Your Taxes

There are lots of things to consider when divorcing or separating, and it is a difficult time emotionally and financially for most people. Big changes are taking place in your life, and you should be aware of how these changes may affect your taxes.

Here are some things you should know about alimony, child support, IRA's, and name changes:

Alimony payments paid under a divorce or separation instrument are deductible by the payer. Taxpayers can deduct alimony paid under a divorce or separation decree, whether or not they itemize deductions on their return. They must file Form 1040; enter the amount of alimony paid and their former spouse's Social Security number or Individual Taxpayer Identification Number.

Taxpayers should report alimony received as income on Form 1040 in the year received. Alimony is not subject to tax withholding so it may be necessary to increase the tax paid during the year to avoid a penalty. To do this, it is possible to make estimated tax payments or increase the amount of tax withheld from wages.

Child support payments are neither deductible nor taxable income for either parent.

A final decree of divorce or separate maintenance agreement by the end of the tax year means taxpayers can’t deduct contributions made to a former spouse's traditional IRA. They can only deduct contributions made to their own traditional IRA. For more information about IRAs, see IRS Publications 590-A and 590-B.

Remember to notify the Social Security Administration (SSA) of any name changes after a divorce. Go to SSA.gov for more information. The name on a tax return must match SSA records. A name mismatch can cause problems in the processing of a return and may delay a refund.

Contact

  • Address:DJL Accounting & Consulting Group, Inc.
    Cider Mill Professional Center, Building C-102
    1570 S Canfield Niles Road
    Youngstown, Ohio 44515 
  • Phone:330 779 0781