Family Law AdvisorŪ
Frequently Asked Questions
- Income Tax -
1) My court order requires both alimony and child support. Can I deduct these payments on my federal tax return?
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Yes and no. Alimony is fully deductible while child support is not..
2) Then how does my "ex" treat these payments?
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She must include all alimony payments in her taxable income. Child support is not taxable.
3) If I pay for the children's support, shouldn't I get the child dependency exemption ?
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That would seem fair, but it's not the law. The custodial parent gets the exemption unless he or she waives it by completing IRS Form 8332.
4) My lawyer insisted that alimony terminate upon the death of either party. She said something about taxes. What was she talking about?
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If alimony does not terminate upon the death of either party, then your payments would not be considered alimony for federal income tax purposes. Simply put, you would loose the deduction!
5) Our divorce decree divided our property equally. Will either of us have to pay taxes at the time of transfer?
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No, provided all such transfers were part of the divorce settlement or judgment.
6) What about the house? I transferred the marital home to my wife and it is worth much more than we paid for it. Will she have to pay capital gains taxes?
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Not at the time of transfer.
7) Will she ever have to pay capital gains taxes? ?
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Yes. Upon sale, her capital gains taxes would be the same as if the two of you stayed married, except she would be solely responsible unless your divorce judgment said otherwise.
8) My spouse and I separated, but the final divorce won't occur until mid-1996. How do we file for ?
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If your divorce decree is not final by December 31, you must file as married--either jointly or filing separately.
9) What if the decree became final in ?
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Then you must file as single for 1995.
10) Even through we were married most of the year?
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Yes.
11) My "ex" was totally dishonest. I didn't realize it, but he had my sign a fraudulent tax return. What happens to me?
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The IRS has an "innocent spouse" rule. Consult your tax AdvisorŪ to see if it applies. .
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