There’s no easy way to say it: Divorce is painful. It’s a stressful time for both parties, and while money is a central issue of many divorces, changes in your tax status (and some will be substantial) often fall by the wayside. At the Law Offices of Rod Polston, it’s our job to always look out for our clients especially when they’re going through something as difficult as divorce and to ensure that your transition is as smooth and straightforward as possible.
Before Divorce/During Separation
In Oklahoma, spouses are still legally married, even if they receive a decree of legal separation, though the court will distribute property equitably, and may award custody and alimony. For many couples, obtaining a decree of legal separation is simpler, because it resolves many of the issues addressed during a divorce, and can be filed during the statutory waiting period to obtain a divorce (10 days without children, 90 days with children). But the IRS considers you married for the entire tax year unless you file for divorce by December 31st. So while separated, you cannot file taxes under “single” or “head of household”, but rather under “married filing jointly”, or “married filing separately.” Filing separately means paying more taxes, but filing jointly means that you share responsibility with your spouse. In other words, if your spouse fails to file taxes, you will be liable. So while separated, be careful how you choose to file taxes.
If you’ve obtained a “decree of separate maintenance“, one spouse can continue to support the other before, during, and after separation, but you are still legally married and must file taxes jointly or separately.
Taxes After Divorce
Unfortunately, the IRS does not offer deductions for court costs and legal fees after a divorce. If you choose to change your name after divorce, be sure to notify the Social Security Administration, as the name on your tax form must match their records.
If you’re the one paying alimony, you can deduct any court-ordered alimony paid to your (former) spouse. However, voluntary payments are non-deductible.
If you’re the one receiving alimony, that alimony is taxable in the year you receive it. It’s not subject to withholding, so it’s wise to increase the tax you pay throughout the year to avoid any penalties, or to make estimated tax payments quarterly to the IRS. Technically, alimony received is considered income, and may place you in a higher tax bracket.
Custody & Child Support
In Oklahoma, the IRS considers the parent who cares the child for the majority of the year to have primary custody, and thus claim the exemption for the child. In Oklahoma, the non-custodial parent can claim exemption for the child as well, by using IRS form 8332, and attaching the form to his or her tax return.
Child support payments are not deductible and if you received child support, it is not taxable.
Divorce will always be a difficult process, but we hope these tips will help clear some things up, and allow you to focus on what matters most: Your family. If you have any further questions or are seeking tax representation, be sure to browse our services page and fill out the form for a free consultation. Or give us a call at 405-801-2146. We’re open 8am-5pm Central with convenient locations across Oklahoma – Oklahoma City, Tulsa, Edmond, Norman, Yukon, and Lawton.