It’s that time of year again. The holidays are gone. The tree is down. W-2’s will be in the mail and on their way before you know it. Each year tax season brings with it new law, new questions, and new decisions. Adding a divorce or separation in the mix makes things even more complicated.

1. Did you receive or make alimony payments?

For cases resolved prior to January 1, 2019, you may be able to deduct from income the amount of alimony or separate maintenance you paid. If you received alimony you may need to include the amount of alimony or separate maintenance you received as income.

The law changed in 2019. Alimony ordered or agreed to in cases after January 1, 2019, will no longer be deductible to the payor or taxable as income to the recipient. The IRS does not limit what you report as alimony to only amounts that you designate as alimony. Noncash property settlements, whether in a lump sum or installments, do not qualify as alimony. Voluntary payments (i.e., payments not required by a divorce decree or separation instrument) do not qualify as alimony. Review topic 452 on the IRS.gov website. 

2. Did you make or receive child support payments?

Child support is never deductible. If your decree of divorce or separate maintenance provides for alimony and child support, and you pay less than the total required, the payments apply first to child support. Any remaining amount is considered alimony.

3. Did you move?

If yes, you need to report your new address to the IRS. Be sure to update your tax withholding status with your employer for the new year.

4. Part of your divorce cost may be tax deductible.

You cannot deduct legal fees and court costs for getting a divorce. But you may be able to deduct legal fees paid for tax advice in connection with a divorce and legal fees to get alimony. In addition, you may be able to deduct fees you pay to appraisers, actuaries, and accountants for services in determining your correct tax or in helping to get alimony. Talk with your accountant or CPA about this issue and be sure to bring all of your receipts and documentation with you to your appointment when you have your taxes completed.

5. Did you and your spouse sell property as part of your divorce?

If so, you must report your share of the gain or loss on your income tax return for the year of the sale. This is determined by your state law governing ownership of property. For information see IRS Publication 544.

*This is for educational purposes only and is not tax advice. You should consult with a tax advisor, accountant, or CPA for tax advice.