The end of January is a great time to refresh everyone’s recollection of some of the key tax impacts with divorce. Forbes magazine obliges with:
Filing status: You can still file a joint return for 2014 as long as you were still legally married on December 31st. If you divorced during the year, you can still file as single head of household for greater tax savings.
Dependents and Deductions: If your children lived with you for more than half of the year (or, regardless, if you and your spouse agreed to it), you can claim the child dependency tax deduction. You and your spouse can negotiate who gets child related deductions and credits, and it doesn’t always have to be the same parent.
Alimony: By default, a spouse who pays alimony gets a deduction for it and the receiving spouse must include the alimony as income. But, remember, this too can be negotiated.
Child Support: But child support is tax neutral, neither deductible nor includible.
401(k)s: Transfers between spouses as part of property division in a divorce will not trigger early withdrawal penalties IF incorporated into a special court order called a QDRO, or Qualified Domestic Relations Order.
Capital Gains on Sale of a Home: If there has been very substantial appreciation on homes during the marriage, you should check out the capital gains sales tax breaks.
Mortgage Interest Deductions: Mortgage deductions are allocated the same as title. It doesn’t matter who actually lives in the home.
Read more in this Forbes article: Getting Divorced? 8 Things You Must Know About Taxes
