New Jersey couples researching about divorce may be interested in some of the tax issues that newly-divorced spouses may encounter. These issues could potentially affect the tax liability of people in both positive and negative ways.
One of the big issues that divorcees must deal with regarding their taxes is changing their filing status. Determining what tax year to change it in depends on the calendar year when the divorce was finalized. If the couple is legally divorced at any time before the end of a year, that spouse must change their status from married to single for that tax year. In cases where the couple is still only separated on Dec. 31, they are not required to change their filing status.
Other issues involve alimony deductions and name changes. A spouse who receives spousal support payments is required to declare these on their tax returns as part of their taxable income. The spouse who is paying this spousal support, however, is allowed to deduct those sums from their income. The person paying must include the recipient’s social security number on their return so that the IRS can ensure that the recipient has claimed this income. When a spouse changes their name following a divorce, they must be sure to alert the Social Security Administration of their new surname. If the IRS receives a return with a name that doesn’t match the given social security number, the return will most likely be rejected.
Keeping these things in mind before a divorce may help a spouse to gauge what effect the split will have on their tax situation. For help throughout the divorce process, an attorney may be useful for child custody questions and advice on fair asset division and alimony payments.
Source: Yuma News Now, “How Marriage And Divorce Can Impact Your Taxes“, April 05, 2014