5 Tax Questions to Ask After Your Divorce

Divorce is a tricky business. It affects emotions, finances, social concerns, property divisions, and custodial concerns. Once those papers are signed, a huge weight is lifted but soon replaced by reality. Part of that new reality involves the dreaded tax season. Perhaps your partner always did the household taxes, or maybe you've sent them out to a professional. Even if you've tackled them yourself, your new marital status leads to new rules. So before walking away from your Michigan divorce attorney, be sure to ask him or her questions that arise regarding the tax implications of divorce. Read on for questions and answers to get you started:

What Is My New Filing Status in Macomb County, Michigan?

December 31 is the final tax assessment day fo-r marital status. This means that if you’re legally married on the final day of the calendar year, you’re considered married for that tax year. Likewise, if your divorce is finalized on New Year’s Eve, you’re considered divorced for the entire year by tax standards. You may elect to file your taxes jointly or separately as a legally married couple. Head-of-household claims are primarily for unmarried individuals who pay more than half of the annual household expenses.

Can I Claim My Children, Or Not?

If you are the custodial parent, you may claim your children, but trading the exemption to the non-custodial parent is simply a matter of using the right tax form. The monetary value of the tax exemption varies greatly depending on income level. Tax credits, however, are another matter entirely. Tax credits may only be claimed by the custodial parent. Unless stated otherwise by your Michigan divorce lawyer, the custodial parent also has the right to claim the child as a dependent.

Are Child Support and Alimony Payments Deductible or Taxable?

Alimony payments can be deducted if they’re assigned legally under a divorce or separation action. Anything voluntary, additional, or made under mutual decision outside of a legal order cannot be taxed or deducted. Child support payments, however, are never tax-deductible nor are they taxed. Alimony, however, is taxable income.

Are Awarded Assets in My Divorce Settlement Taxable?

The beneficiary of awarded assets in a divorce settlement is not responsible for taxes on the transfer of those assets. Should you decide to sell those assets at a later time, however, you’ll be responsible for the capital gains taxes on the appreciation of those assets. Since capital gains taxes can run 10-20 percent on the appreciation, you can be looking at tens of thousands of dollars in taxes alone. So consider that before deciding to sell big-ticket items like residential property.

Are My Michigan Divorce Lawyer Fees Deductible?

Your divorce attorney will probably take a deep breath, give you a warm smile, and maybe even a chuckle over this one. That’s because he/she hears it a lot. The answer is no. Divorce is a personal decision and fees to your divorce team are therefore not tax-deductible. If you've sought out professional tax advice or had your taxes handled professionally in the past, or specifically for your divorce (financial planning, property tax advice), those fees may be able to be deducted. The only legal fees that may be claimed involve fees accumulated to the payment of spousal support.

Contact your qualified Michigan divorce attorney to get your ducks in a row before filing your post-divorce taxes.

Femminineo Attorneys
Michigan Divorce Help
110 S Main St #200
Mt Clemens, MI 48043
United States
(586) 954-9500
http://www.michigandivorcehelp.com/

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