Five Commonly Asked Tax Questions about Divorce

Marriage and divorce are both common experiences in Western culture. While more than 90 percent of people marry by age 50, about 40 to 50 percent of married couples in the United States divorce according to the American Psychological Association. The divorce rate for subsequent marriages is even higher.

Going through a divorce is the 2nd most stressful life event an individual can experience, according to the American Institute of Stress. While the emotional impact should be the most critical aspect for families to navigate, sorting out the financial implications can be especially burdensome. Knowing a few basic tax ramifications can be helpful to alleviate some of the financial stress.

“Name or address change are just a few items you may need to consider if you are going through a divorce,” said Kyle Kasperek, Senior Associate at John Kasperek Co., Inc., a certified public accounting firm in Calumet City, Illinois. “There are also tax implications for situations such as alimony and claiming dependents that should not be overlooked.”

Five commonly asked tax questions about divorce:

1. How do I change my married name back to my maiden name?

Individuals who decide to change their name after a divorce should inform the Social Security Administration and file Form SS-5 – application for a Social Security Card.

2.  Is alimony tax deductible?

Individuals paying legally decreed alimony may claim it as a deduction regardless if they itemize. However, voluntary payments are not deductible. The spouse receiving alimony includes this as income.

3.  Will my child support be taxed?

No, child support payments are not taxable, nor are they deductible for the payor.

4.  Who is able to claim the children as dependents?

Generally, the custodial parent claims the dependent but there are other factors which the noncustodial parent should be aware in certain situations. Additionally, a divorce or separation decree may entitle the noncustodial parent to claim the dependent based on the terms of the agreement. There are also special “tiebreaker rules” when there is no divorce decree in place.

5.  Are moving expenses deductible?

No, the only applicable situation for deducting moving expenses is within one year of the date you start work at a new job location. Additional rules apply to this requirement.