By Inna G. Materese | Esquire

It’s that time of year again.

The time of year you may be asking yourself how to file your taxes if you’re going through or contemplating a family law matter. Going through a divorce or other family law matter can be a trying process all its own so it’s no wonder that most of us often forget that our legal case may have tax implications. So, what do you need to consider?

  1. Choose the right filing status. While you may consider your marital relationship to be over, the IRS will continue to treat you as a married person so long as you are still legally married on December 31st.  In most circumstances, you have only two filing options available to you while going through the divorce process: (1) Married Filing Jointly and (2) Married Filing Separately. Speak with your attorney about the advantages and disadvantages of each status in your case. 
  2. Talk about who claims the Children (and do it early). If you intend to file a separate return, consider who will claim the dependent exemption for the children. Joint custody arrangements may lead to confusion regarding which parent is entitled to claim the exemption and whether the exemption may be used as a bargaining chip in the litigation. Discuss these options with your attorney and your accountant.
  3. Don’t call it Alimony (unless it is). Beware of support payments “alimony/APL” on your tax return. Any payments an individual makes or receives before the divorce is final are not considered alimony/APL by the IRS unless they are made pursuant to a court order and specified to be alimony/APL. Confirm with your accountant and attorney whether payments you make or receive qualify.
  4. Consult with an attorney AND an accountant. A family law attorney can help you learn about the potential tax consequences of your legal action and can provide a strategic approach to get you the most tax-effective result in your case. However, while your family law attorney is certainly familiar with tax considerations involved in your matter, he or she is likely not an expert on the calculations, nuances, and in-depth institutional knowledge necessary to offer you tax advice. Speaking with an attorney and a tax professional is always the best practice.