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Divorce has an impact on income tax

Divorce law varies widely from state to state, but federal tax law is uniform across the country. In Georgia and the other states, for example, the Internal Revenue Service considers parties unmarried for the entirety of the year during which the divorce decree was finalized. Among the other ways in which divorce will affect taxes are with regard to alimony, dependents and certain tax breaks.

Alimony payments are deductible on Form 1040, regardless of whether the individual itemizes deductions. Those who receive alimony payments are required to claim them as income, likewise, on Form 1040. In order to qualify as alimony, a payment must be required by the separation or divorce agreement and must be paid in cash, which is defined to include checks and money orders as well. Child support, on the other hand, is neither deductible by the payer nor taxable to the recipient.

Once a couple is divorced, only one of the ex-spouses can use the dependent exemption for the children. The default position is that the custodial parent has the right to claim the exemption. In a case where the parties have agreed the non-custodial parent will get the exemption, both parties are required to fill out IRS Form 8332, and the noncustodial parent must include the form with his or her tax return.

Most tax breaks available to parties filing jointly can only be claimed by one or the other after divorce. Only one of the parents can claim the child tax credit, for example, and the mortgage interest deduction will be available only to the party who got the house. Individuals who are approaching or going through divorce in Georgia might want to speak with a lawyer who can lay out the tax consequences of the process.

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Hecht Family Law
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