Most people hope that financial and legal difficulties are in the past when a divorce is finally settled. During this tax season, some Oregon divorcees might be surprised to find that this isn't always so. While the deadline for taxes to be filed is April 15, the IRS does grant extensions to certain individuals. Since filing taxes after a divorce can include decisions that have previously not had to be made, keeping important details in mind, such as alimony and child custody, can ensure a smoother process for those involved.
For many divorced spouses, alimony is an integral financial aspect of their day-to-day life. However, it is important to note that alimony payments are subject to being taxed. For the person paying, alimony is a deductible. For the recipient, it's considered as taxable income. It is imperative that any ex-spouse who receives alimony be aware that they will be required to pay taxes on their spousal support.
It is also important for divorced couples to be aware of who claims any children as dependents. In previous years, this could be hammered out and then specified in a couple's divorce decree. This changed in 2009, if a non-custodial parent wishes to claim the children, the custodial parent must sign a form from the IRS allowing them to do so. Since every situation is unique to a divorced couple and their children, claiming dependents might alternate year to year or simply go to one spouse because of their income.
For Oregon individuals who may be filing their taxes late, taking a recent divorce into account during the filing process is important. Alimony can have significant effects on an individual's tax filing, and in some instances it may even tip a return into money owed. Furthermore, divorcing couples would likely benefit from discussing and negotiating an agreement concerning who claims the children as dependents, considering that this can no longer be simply dictated in the divorce decree.
Source: The Huffington Post, "4 Things To Know About Filing Your Taxes After Divorce", Lauren Young, April 10, 2014