Divorce Tax Tips : Options to Consider

Emotions of divorce can be overwhelming but knowing what to expect when filing one?s taxes need not be overlooked. Understanding your tax filing options can and will make for no surprises as far as taxes goes. Divorced with children makes for special considerations to understand how your tax filing is affected. For instance, if you are the non-custodial parent and want to claim your child or children as a dependent, you must get form 8332 signed or stated in the divorce decree allowing you the right to claim your dependents. Form 8332 is the official form of the IRS for wavier to claim a dependent. In fact, you can use any kind of release as long as it spells out who get the deduction. The custodial parent always has control over this and for the release to be legal must be signed by the custodial parent.
The length of time of release (either 1 year or all future years), the wavier must be clear and explicit, signed and dated. In my experience, if wavier is included in divorce decree, this in itself saves communicating and negotiating with ex-spouse in the future.
The non-custodial parent, with social security numbers and date of birth of dependent?s presents wavier to tax preparer and/or attaches wavier to their return. The wavier must be sent to IRS to confirm status when filing. The non-custodial parent now has the right to claim the $1,000 child tax credit per dependent as long as the child is less than 17 years of age during current tax year.
If dependent(s) is over 17 years of age during tax year the credit is phased out, only leaving the standard deduction for each dependent. The custodial parent by signing release stills get to claim head-of-household status, the earned income credit, and dependent care credit even though they have released the right to claim the child as a dependent. If you are in a higher tax bracket than your ex-spouse, modifying agreements to re-characterize payments as alimony would bring tax savings that could be shared by both parties. Child support is nondeductible by the payer, and is not included in the taxable income of the recipient.
Alimony is the exact opposite, the payer deducts the alimony payment, and the recipient includes the alimony as income on his or her tax return. If you are legally required to pay any medical expenses for your ex-spouse, deduct the expenses as alimony instead of on Schedule A as an itemized deduction. If you do not have custody of your child, you can still deduct your child?s medical expenses on your tax return if you are the one that pays the medical expenses. Form 1040 Schedule A. Usually agreement are easier at time of divorce and should be considered at that time.
If you need clarification, contact me or use my guess book for your question @ TaxMart
?An Informed Taxpayer Saves Money?
Larrie
TaxMart
divorcetaxtips@onlinetaxmart.com

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