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Taxes and Divorce - Common Questions Answered

1. Tax filing status-Should I/Can I file married or separate? Your filing status is determined based on your marital status as of December 31. Hence, the end of the year rush to push as many divorces as possible through in my office. If you were married on December 31 you have the option of filing married, jointly or married, filing separate. This is true regardless of where you lived on December 31. Talk to your CPA but almost always it is more beneficial to file jointly than to file married, filing separate. The exception to this rule would be if you believe your spouse has committed tax fraud by failing to report income or taking losses that are not otherwise deductible.

2. Dependency Exemptions? Who gets 'em? In Missouri your agreed upon Parenting Plan addresses this issue. Absent, a written agreement about who claims the child as a tax dependency exemption the right to claim belongs to the parent who has had the child more than one-half of the year. If both parents spend exactly equal amounts of time with the child then the parent who receives child support claims the exemption. Almost always you can figure out which parent has slightly more days than the other for purposes of claiming the exemption. If you have a college-aged child be careful about who claims the exemption because this will have an impact on financial aid available to the child for purposes of college aid.

3. Can I deduct child support? No. However, some health care expenses for children and college tuition may be deductible. Also, for younger children work-related daycare expenses will be deductible.

4. Is the money I paid my spouse to equalize the property division deductible? No. Any settlement monies you paid your spouse to equalize the division of property are not tax deductible. These are monies paid incident to a divorce and there are no tax consequences related to the cash settlement you paid your wife to allow you to keep the house, retirement package, etc.

5. Can I deduct maintenance? You can deduct maintenance if the following requirements are met: 1. The payments are pursuant to a written agreement or judgment; 2. You are not members of the same household, 3. The payments are not child support, and 4. The payments cease upon your former spouse's death.

6. Can I deduct attorney fees? Most likely no. However, if you itemize and your total miscellaneous deductions exceed 2% of your adjusted gross income, then you can deduct these types of fees: 1. Fees you paid for tax planning; 2. Fees you paid to obtain taxable income (i.e. maintenance); and 3. Fees you paid for securing an interest in a qualified retirement plan. If you do not itemize deductions or your deductions do not pass the 2% adjusted gross income test then you cannot deduct those fees.