Peaceful Divorce

3 Important Tax Considerations For People Who Divorced In 2015

If you have been divorced at any time in 2015, there are specific pieces of information you need to be aware of before tax time arrives:

  1. Who claims the children? Prior to 2009, you could specify in a divorce decree which parent claimed the dependency exemption; since then, it is no longer an option to use a divorce settlement agreement to backup your claim of dependency. Instead, you must use IRS Form -*8332, entitled Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. This form must be signed by the custodial parent, for use by the non-custodial parent, and be attached to each person’s tax return. As well, some parents choose to alternate who can claim the dependency from year to year.

Each qualifying child must be under the age of 19 at year-end and live with the parent more than half of the year in order to claim the exemption. The exemption also applies if your child is under age 24 and is a full time student, defined as attending school for at least part of five calendar months during the year.

  1. What is your filing status? This is something that can trip people up. A lot of times, people assume that they’ll file taxes together because they were married for part of the year, but that can’t happen. If you're divorced on December 31, you're considered single or head of household for the entire year.

  2. Alimony is taxable to the person receiving it and deductible to the person paying it. Often, it’s a big shock when couples untangle everything - there may be a tax jump when the filing status changes after the divorce. Child support, by contrast, is not taxable to the recipient, and is not deductible to the person paying it.

These are all important pieces of information to remember if divorce happened to you in 2015. And be aware - you may have to deal with your ex-spouse in order to gather the information you need for this year.  

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