by Robin Roshkind, Esquire, West Palm Beach, Florida
Divorce and Taxes…tax debt is a common problem that divorcing couples face. There are several issues in the divorce process that concern the IRS:
1. Do you or your spouse owe the IRS monies.
2. Who will get the head of household exemption.
3. Who will get the child exemptions.
4. Will you be filing married filing jointly, or married filing separately.
5. Alimony is taxable to the recipient as income and deductible to the payor.
6. Child support is taxable to the payor and non taxable to the recipient.
7. Retirement plans can be divided between Husband and Wife by Qualified Domestic Relations Order (QDRO) without any tax consequences if rolled over properly.
8. Transfers of property need to be done properly with tax ramifications considered in advance.
9. There may be capital gains tax on property you receive in a divorce settlement but sell off later.
Should all else fail, ask your tax advisor about the “innocent spouse” defense, which you can file with the IRS.
By Robin Roshkind, Esquire, West Palm Beach, Florida
Timing of a divorce often includes many customized factors. People may wait until the marital home sells before they divorce. They may wait to divorce when the youngest child goes off to college and is out of the house. They may wait until just after Christmas??? Yes, often couples decide to divorce at this time of year for tax reasons…or a fresh start to the new year. It makes life a little simpler for marrieds and singles.
If you are married until December 31, 2008, you must file your 2008 taxes as a married person. You spent the year married. You can still file as a couple or as a married filing separately, but you are married in the eyes of the IRS. If you divorce before the year is out, you must file as a married for 2008, but the good news is in 2009 you can file as a single. You may also have head of household deductions for children living with you. And you can tap the child tax exemptions for 2009 if you are the custodial parent, that is the parent with whom the children live for a majority of time.
Oftentimes, couples rush to divorce court to execute the divorce papers before the year is out. This also gives a fresh start for the new year. On the other hand, many couples wait it out…hoping to stay together for the holidays to celebrate as a family, and for the sake of the children. This puts the marriage into the next year, and couples must file as marrieds even if they are only married for a small portion of the new year. There are many reasons to divorce before the year is out. Talk to your tax advisor before you call in the lawyers. For more information, click on the website of Robin Roshkind, P.A. at www.familylawwpb.com or consult with one of the attorneys at the Firm by calling 561-835-9091.