If you were separated or divorced in 2018, then there will be certain tax implications, the most basic of which is your filing status. If you are separated but have not received a final divorce or legal separation decree, then you are considered married for the entire year for tax purposes and must file as:
- Married Filing Jointly OR
- Married Filing Separately
If your divorce or legal separation became official by December 31, then you can file as single or, if the kids are with you, head of your household. Otherwise, you and your spouse can decide whether to claim the children on one joint tax return or opt for the Married Filing Separately status and claim one child per return.
How alimony payments affect taxes
If you are paying alimony as the result of a finalized divorce or separation agreement, then you can deduct these payments on your federal and state income tax returns conditions if the following apply:
- They are authorized by a court order
- You made the alimony payments in cash, checks, or money orders
- You and your spouse no longer live together
- The money is for alimony and not included in a child support payment
- Your spouse includes it in their taxable income
If you are receiving alimony, then you must report the payments as income on your income tax returns.
It is important to note that the law changes in 2019. If your divorce or separation agreement is finalized in 2019 or later, then you cannot deduct your alimony payments from your tax returns. If you are receiving alimony, then you do not need to report them on your returns. These changes do not apply to pre-2019 divorces or separations, even going forward, as the payments are grandfathered into the old tax rules.
How child support affects taxes
A child can only be claimed by one parent on the latter’s tax return. You may claim your child as a dependent if you are legally the custodial parent or they lived with you more than they did with their other parent during the tax year.
If you are paying child support, then you cannot deduct the payments on your tax return. If you receive support payments, then you do not have to report them as income on your tax return.
If you contribute to your child’s medical expenses after the legal separation or divorce, then you can claim them as a medical expense deduction even if you are not the custodial parent.
Sale of the marital home
If you and your former spouse decide to sell the marital home when you divorce, then capital gains tax may impact you. In general, you and your spouse can each avoid paying tax on gains of up to $250,000 if you lived in the home for two of the last five years. If you sell the home after the divorce, then you may be able to qualify for certain exclusions.
Doing your first tax return after divorce can be intimidating, but your New York family law attorney may be able to recommend a financial expert who works regularly with divorced or separated clients. Be sure to ask!
Jayson Lutzky is a Bronx divorce and family law attorney. He has over 35 years of experience practicing law in New York and has helped thousands of highly satisfied clients file for both contested and uncontested divorces. Mr. Lutzky offers free in-office initial consultations and can be reached at 718-329-9500.
For more information, visit https://www.efile.com/tax-deduction/income-deduction/divorced-tax/.