The term “spouse” includes an individual married to a person of the same sex. However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that isn’t considered a marriage under state law aren’t considered married for federal tax purposes. The IRS will issue an ITIN to a nonresident or resident alien who doesn’t have and isn’t eligible to get a social security number (SSN). If you’re required to include another person’s SSN on your return and that person doesn’t have and can’t get an SSN, enter that person’s ITIN. Your filing status is another important factor affected by divorce, and Publication 504 provides clear instructions regarding this.
Divorce can be a tough and stressful time, and the additional burden of understanding the changes in taxation can exacerbate the situation. Thankfully, the IRS’s Publication 504 serves as a beacon, helping divorced or separated individuals navigate the tricky waters of post-divorce taxation. With clear guidelines on everything from alimony to QDROs, child custody to property division, this publication is a comprehensive guide to understanding and managing the tax implications of divorce.
Instruments Executed Before 1985
A separation agreement may divide the community property between you and your spouse. It may provide that this property, along with future earnings and property acquired, will be separate property. A decree of annulment, even though it holds that no valid marriage ever existed, usually doesn’t nullify community property rights arising during the “marriage.” However, you should check your state law for exceptions.
- You’ll have the option to submit your form(s) online or download a copy for mailing.
- The result would be the same if the payment required at death were to be discounted by an appropriate interest factor to account for the prepayment.
- For information on innocent spouses, see Relief from joint liability, earlier..
- Use the appropriate community property law to determine what is separate property.
Gina’s basis in the interest received from Larry is the part of the home’s fair market value proportionate to that interest. Don’s basis in the interest received from Karen publication 504 divorced or separated individuals is her adjusted basis in the home. You own property with a fair market value of $12,000 and an adjusted basis of $1,000. You transfer the property in trust for the benefit of your spouse. The trust didn’t assume any liabilities.
Gift Tax on Property Settlements
If you were considered married for part of the year and lived in a community property state (one of the states listed later under Community Property), special rules may apply in determining your income and expenses. If you and your spouse file separate returns and one of you itemizes deductions, the other spouse can’t use the standard deduction and should also itemize deductions. If you claim any of the payments on your tax return, enter your spouse’s or former spouse’s social security number in the space provided on the front of Form 1040 or Form 1040A. The payments will stop at the end of 15 years or upon your former spouse’s death, if earlier. For example, if your spouse dies at the end of the tenth year, you must pay the estate $150,000 ($450,000 – $300,000). The following rules for alimony apply to payments under divorce or separation instruments executed after 1984.
Children of Divorced or Separated Parents (or Parents Who Live Apart)
The choice between Single and Head of Household depends heavily on living arrangements and dependents. Treat all other community income, such as dividends, interest, rents, royalties, or gains, as provided under your state’s community property law. If all these conditions exist, you and your spouse must report your community income as explained in the following discussions. See also Certain community income not treated as community income by one spouse , earlier. If you transfer investment credit property with recapture potential, you also must provide sufficient records to determine the amount and period of the recapture. For the rules for alimony payments under pre-1985 instruments not meeting these exceptions, see the 2004 revision of Pub.
- On December 2, 2015, a court executed a divorce decree providing for monthly alimony payments beginning January 1, 2016, for a period of 10 years.
- The income tax liability from which you seek relief is attributable (either in full or in part) to an item of your spouse (or former spouse) or an unpaid tax resulting from your spouse’s (or former spouse’s) income.
- For more information on the tax treatment of eligible rollover distributions, see Pub.
- In this case, only your husband will be allowed to treat your son as a qualifying child.
- Visit IRS.gov/FormsPubs to download forms and publications.
Help and Support
You must meet all the following conditions for these special rules to apply. All taxable alimony you receive under a decree of divorce or separate maintenance is treated as compensation for the contribution and deduction limits for traditional IRAs. You must reduce the dollar amount of your exemptions by 2% for each $2,500, or part of $2,500 ($1,250 if you are married filing separately), that your AGI exceeds the amount shown above for your filing status. If your AGI exceeds the amount shown above by more than $122,500 ($61,250 if married filing separately), the amount of your deduction for exemptions is reduced to zero.
It is better to know the lay of the land early so that you can file separately and on time if necessary. Even if there seems to be an immediate financial benefit to you to file jointly, keep in mind that there are occasions where joint filing may have long term disadvantages that should be taken into consideration. First, consider that no matter what the terms of an agreement or ruling from the court regarding tax liability, the IRS is a third party creditor not bound by your agreement or the ruling from the court.
Along with these general guidelines, Publication 504 refers to several specific forms relevant to divorced or separated individuals. One of these is Form 8332, used for releasing or transferring the claim to a child as a dependent to the noncustodial parent. This form becomes essential in cases where child custody is changed or shared. (Some states treat income from separate property as separate income—check your state law.) Sharon didn’t take part in George’s consulting business. If you claim any of the payments on your tax return, enter your spouse’s or former spouse’s SSN in the space provided on the front of Form 1040 or 1040-SR.
If the decree or agreement went into effect after 2008, a noncustodial parent claiming an exemption for a child can’t attach pages from a divorce decree or separation agreement instead of Form 8332. The only purpose of this statement must be to release the custodial parent’s claim to the child’s exemption. The noncustodial parent must attach a copy to his or her return. The form or statement must release the custodial parent’s claim to the child without any conditions.
You’ll need scans of your documents to support your submission. Go to IRS.gov/MobileFriendlyForms for more information. Go to IRS.gov/DisasterRelief to review the available disaster tax relief. Form 9000, Alternative Media Preference, or Form 9000(SP) allows you to elect to receive certain types of written correspondence in the following formats. You can find information on IRS.gov/MyLanguage if English isn’t your native language.
Table 4. Expenses for a Jointly Owned Home
This rule applies even if you provided all of your former spouse’s support. When you become divorced or separated, you will usually have to file a new Form W-4 with your employer to claim your proper withholding. If you sell property that you and your spouse own jointly, you must report your share of the recognized gain or loss on your income tax return for the year of the sale.
If your spouse was a nonresident alien at any time during the tax year, and you haven’t chosen to treat your spouse as a resident alien, you’re considered unmarried for head of household purposes. A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. The personal representative has 1 year from the due date (including extensions) of the joint return to make the change. 559 for more information on filing income tax returns for a decedent. If you sold your main home, you may be able to exclude up to $250,000 (up to $500,000 if you and your spouse file a joint return) of gain on the sale.
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