The exchange of information and the property division process after a divorce can be a challenging one. What can make things worse is your ex withholding tax information during divorce and being entirely uncooperative.
Even after divorce, trying to figure out the process of filing taxes is a whole new obstacle. Unfortunately, you do need to work with your ex when you claim the child on your tax return.
Here’s what you need to know about tax information during divorce, filing taxes after a divorce and what to do if your ex does not cooperate.
Tax Information During Property Division, Child Support and Alimony Payments
As a result, your ex may withhold information as that might result in higher child support payments as part of the divorce agreement if they are a non-custodial parent. This can also potentially lower the child support payments that you receive if they are the custodial parent. There can also be implications on alimony payments received.
Both parties are required to make full disclosure of their assets when going through a divorce. This also includes information about taxes which can often reveal assets that you might not know that your ex-spouse had.
If alimony and child support is an issue during a divorce, you and your ex-spouse must provide the following information to each other:
- Income tax returns for the previous two years
- Form W-2, Form 1099, and Schedule K-1 if you did not file a tax return for the preceding two years
- Two most recent payroll check stubs
This is in addition to other information about personal finance, retirement plans, account statements, property owned, and insurance policies.
Consequences of Property Division
It’s important to consider the tax implications of asset division. Property transfers can be subject to income taxes or gift taxes except under certain conditions.
Generally, the transfer of property to an ex will not be subject to capital gains tax or gift tax if it occurs within one year of the marriage ceasing or if it is pursuant to a divorce agreement (including modifications). The timing if you decide to sell your home will also be important for tax purposes.
Child support is not a tax-deductible expense in the payor’s income tax return if your divorce was final by Dec 31, 2018. You also cannot deduct alimony payments from your tax return. The spouse who receives alimony or child support also does not need to report it as taxable income if the divorce was final by December 31, 2018.
Filing Taxes After Divorce
There are a few things that you need to be aware of when filing your taxes after a divorce.
Filing Status
Your filing status depends on your marital status. If you are divorced by 12 a.m. on December 31 of the tax year, you will be filing separately from your ex. You can file as Single or Head of Household on your separate tax return if you have dependents. This is possible even if you were still married for some months of the year. You will be considered as single for the entire year by the IRS.
However, if you don’t have your divorce decree or legal separation by 31 Dec of the tax year, you are only able to file as Married Filing Separately or Married Filing Jointly. It can become a point of contention with your ex if you have to still file a joint return, although there may be a tax deduction for married couples. Note that your ex can’t file a joint return without your knowledge. Both spouses must sign a joint tax return for the IRS to accept it.
Filing as Head of Household
If you file as Head of Household, it may be more favorable for you. Doing so can allow you to have higher standard deduction and better tax brackets. However, you will need to have had a dependent living with you for more than half the year. You must also show you paid more than half of the maintenance of your home.
Claiming Your Child As A Dependent On Your Tax Return
A noncustodial parent cannot claim the child tax credit on their tax return. Only the custodial parent gets to claim a child on their tax return.
However, divorced parents may still be eligible for certain tax credits even if you can’t claim your child as a dependent. You may also be able to claim some medical expenses that you pay for your child. Speak to a tax expert for updated tax advice.
You do not have to split your tax refund with your ex in exchange for claiming your child after the divorce is finalized.
Requesting Information From Your Ex
You can send your spouse a Request for Production of Documents to ask them to provide information for fair property division. You can also send Interrogatories which are questions that your ex-spouse has to answer under oath. Your ex must respond to these requests or state legal objections.
If you don’t want to wait for your ex, you can have your attorney send a subpoena to third parties who have the financial information relevant to your divorce. You can also send a deposition subpoena so your ex or a third party has to appear in court to be questioned under oath and provide evidence.
Seeking Court Orders
If your ex refuses to provide information, you can ask your attorney to take the issue up with the court. You can file a Motion to Compel which will have the court order your ex to provide the documents requested. Your ex will have to file a written response and write the reasons why they are not providing the information. The judge then decides if the reasons are legally fair and not protected by any legal privilege. If the judge finds in your favor, they will order your ex to provide the documents within a certain time period.
Being Held in Contempt
If your ex refuses to comply with the court order, your spouse may be held in contempt. They can be liable for fines, jail time, an attorney’s fee award where they have to pay your attorney’s fee incurred in filing the court order and disallowing your ex from adding some types of evidence when the case goes to trial.
Navigating Tax Issues in Fort Worth, Texas
When you’re getting a divorce, many tax questions can arise when you have to obtain tax information to determine a fair divorce settlement or when you have to divide assets.
It’s important to engage a qualified tax expert and attorney to help you with these issues to protect your rights. Our family law experts at Sean Lynch with decades of experience can help. If you have any questions, contact us for a no-cost case review.