Tax changes that happen after divorce

Texas couples should be aware that after getting a divorce, their tax situation will change as well. If the divorce occurred on or before the final day of the calendar year, people will not be considered married for that year. If the marriage is annulled, it will also be necessary to file amended returns for all the years of the marriage since legally speaking, the couple is no longer considered to have been married.

Certain exemptions and tax credits are no longer available or are only available to one person. Only one parent, usually the custodial parent, may use the dependent exemption for the couple's children. A noncustodial parent who is claiming the credit instead must include Form 8332 with the tax return. Alimony can be claimed as a deduction but only if it is included in the divorce agreement. The person who receives alimony must pay taxes on it as income. Child support is separate from alimony and is neither tax deductible nor taxable.

The person who got the home can claim the mortgage deduction. Only one parent may use the child tax credit. Couples with more complex taxes may have additional issues.

With a community property state like Texas, assets and debts that are acquired after the marriage are considered shared property although there may be exceptions. For example, if a person receives an inheritance, that may be considered the property of the heir unless the recipient commingled it with marital assets or used it on a shared asset such as home renovations. There may be tax implications for some divisions of property. For example, a qualified domestic relations order is required to divide a 401(k) without penalties.

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