Change in marital status can impact income taxes

On behalf of Lake Toback Attorneys

Illinois residents who are contemplating getting a divorce should be aware that a change in their marital status could impact the way they file their income taxes in the future. Individuals who have already begun the process of getting a divorce may find it necessary to continue working closely with their soon-to-be former spouse at tax time until the divorce process is complete.

For income tax filing purposes, unless a divorce decree is finalized on or before the last day of the calendar year, an almost divorced couple is viewed just the same as a couple that recently got married. Even though married couples can opt to file separate tax returns, and individuals involved in an acrimonious divorce may have additional motivation to consider filing separately, filing separately could be financially detrimental because it could eliminate access to some important tax deductions and credits.

Once the divorce is actually finalized, divorced individuals need to be sure that they have a clear understanding of which divorce expenses can be used as a tax deduction, and which cannot. Although many divorce expenses are not deductible, in most cases, the cost of legal fees incurred during the divorce is an exception to this rule. When it comes to alimony, individuals who are paying alimony can deduct these payments from their income taxes and individuals who are receiving alimony must report these payments as income.

In order to be deductible, however, the spousal support payments must have been either ordered or approved by the court. Purely voluntary alimony payments are neither deductible by the paying party nor included in the recipient’s taxable income.

Source: Yuma News Now, “How Marriage And Divorce Can Impact Your Taxes“, April 05, 2014

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Change in marital status can impact income taxes