With the arrival of tax season, it is important that you take a few moments to consider the tax issues inherent to your dissolution case and/or Judgment for Dissolution. In order to avoid common problems associated with filing your taxes during and after your dissolution, you should review the following:
1. Your current Order or Judgment for spousal or family support.
2. Your current Order or Judgment for child support.
3. Bank records demonstrating amounts that you have paid or received for spousal support during the calendar year.
4. Your current Order for child custody and visitation.
5. Any correspondence or billing statements from your attorney indicating any amount or portion of your attorney’s fees and costs paid during the calendar year that pertained to:
a. Income tax analysis, income tax advice, and income tax planning regarding your dissolution.
b. Production (or enforcement) of income (spousal support).
c. The acquisition and preservation of title to an asset.
After reviewing these records, you should note:
1. Whether your spousal support Order indicates the payment of deductible or non-deductible/taxable or non-taxable spousal support. If your Order contains provisions for a lump sum buy-out of spousal support you need to understand whether that amount is taxable or deductible.
2. How much family or spousal support was ordered versus how much you actually received or paid. If you received or paid an amount different from the payment specified in your Order, you should consult with your attorney.
3. Whether your spouse’s calculation of the amount that he or she paid you or received from you for spousal or family support matches your calculation. You may trigger an audit if the amounts claimed by each party do not match.
4. Which party is entitled to claim any children as dependents.
5. Whether you are eligible under your custody schedule to claim Head of Household status. Again, it is a good idea to verify with your spouse/former spouse which of you intends to claim Head of Household in order to avoid unnecessarily triggering an audit.
If you have any questions regarding your support and/or custody Orders, you should consult with a CPA or tax attorney before filing your returns. If you have your tax returns professionally prepared, you should gather the above-referenced information and/or records to take to your tax professional. If you prepare your own taxes, you should consult the appropriate sources to determine how to properly present this information on your returns.