While tax season may feel a long way off, divorcing couples in Massachusetts might wish to start thinking about it now. With divorce comes a number of adjustments, and amongst those are major tax changes. To avoid hassle later, a divorcing or recently divorced individual will likely find it helpful to begin addressing these matters now.
The first item to consider is filing status. If a divorce was finalized before the last day of the year, the IRS will consider the divorced spouses unmarried, meaning that when a Massachusetts individual files taxes for that year, he or she should no longer file as married, whether filing jointly or separately. Instead, the individual will need to file as either single, or possibly using "head of household" status, when applicable, if children or dependents are involved. The issue of dependents is another that will need addressed, as only one member of the former couple can claim the children as dependents. By default, this dependent exemption usually goes to the custodial parent, but the matter is often not so simple, and professional advice may be highly beneficial in such instances.
Alimony, or spousal support, is another concern that may now need addressed. If the individual is the one paying alimony, he or she may be able to deduct it, even without itemizing. If instead, the tax filer is the recipient of spousal support, it will need reported as income and will be subject to taxation. Additionally, child support does not qualify as alimony for tax purposes; it is neither taxed on the part of the recipient nor deductible by the payer for tax purposes.
These are only a few of the post-divorce tax issues that may benefit from professional advice, especially if the asset and property division process was complicated. After going through a divorce, the last thing anyone wants is an IRS audit, so seeking professional guidance at this time may be wise. At an already stressful time, the legal counsel and support of an experienced Massachusetts family law attorney can help alleviate some of the more nerve-wracking and confusing aspects of divorce.
Source: fool.com, "Getting Divorced? Here Are 4 Ways Your Taxes Will Change", Wendy Connick, Sept. 24, 2017