Many Texas residents find the process of filing income tax returns fraught with confusion. An already challenging process becomes even more complicated by divorce, which changes one's filing status as well as the deductions and exemptions that may be claimed. Here are a few tips on how to approach your taxes if you are going through a divorce.
To determine your 2012 filing status, the relevant date is Dec. 31, 2012. If you were still married on that date, even if the divorce was in process and you were living separately from your spouse, you and your spouse may use "married filed jointly" as your filing status. There are several advantages to this status, including favorable exclusion limits for the capital gain on the sale of your primary residence. One disadvantage is that you will be jointly liable with your spouse if there is an audit.
With respect to the dependent exemption for children, the custodial parent, defined by the IRS as the parent who has the child for more than half of the year, may claim the exemption. If both parents have the child for an equal amount of time, the exemption may be claimed by the parent who pays child support or the parent with the higher adjusted gross income. Notably, the divorce decree can specify which parent receives the exemption; in that case, the terms of the decree will apply.
You may not deduct any child support you pay, but you may be able to deduct other expenses of raising the child, including childcare costs and college tuition. Alimony may be deducted as long as it is paid pursuant to an order or agreement, is not used for child support and ceases upon the ex-spouse's death. Your legal fees are not deductible, but fees for tax planning advice are. An experienced divorce attorney can offer additional information about the tax implications of divorce.
Source: Huffington Post, "Divorce Tax Tips: Five Most Common Tax Questions," Joseph E. Cordell, Jan. 29, 2013