Frequently Asked Questions About Charleston Divorce Taxes [Part 1]
You have acquired a good understanding of your tax situation during your marriage.
All of that is about to change. Many divorce lawyers in Charleston, SC believe that a divorce can be one of the more significant tax events in a person’s life.
With the filing of your Charleston divorce or legal separation complaint, many new tax issues will arise – your tax filing status will change, you may have to pay taxes on alimony or child support, and you may be able to deduct only a small fraction of the attorney’s fees that you pay your Charleston divorce lawyer.
In this article and the companion Part 2, you will find general answers to some of the more commonly asked questions regarding Charleston divorce taxes. You should use these general answers to common Charleston divorce tax questions as a starting point for specific tax strategy discussions with your C.P.A. and divorce attorney in Charleston, SC.
1. Can I deduct from my income taxes the child support that I pay?
No. You cannot deduct from your taxable income the child support that you pay to your former spouse. You will be taxed on the money that you use to pay child support as part of your Charleston divorce or legal separation.
2. Do I have to pay income tax on the child support that I receive?
No. If you are receiving child support, you do not have to report the child support as taxable income.
3. Can I deduct from my income taxes the attorneys fees that I pay to my Charleston, SC divorce lawyer?
You may be able to deduct some – but not all – of the fees and costs that you pay to your Charleston, SC divorce attorney. The amount that you can deduct will depend on the type of work that your Charleston divorce lawyer does for you.
You cannot deduct from your income taxes the attorney fees and costs, which you pay to your Charleston, SC divorce lawyer for the purpose of helping you get divorced. However, you can deduct the amount that you pay your Charleston divorce attorney for tax advice related to your divorce. You can also deduct the legal fees that you pay your Charleston divorce lawyer to obtain an award of alimony or to collect alimony. You may also deduct fees that you pay your Charleston divorce attorney to advise you on estate tax issues related to alternative divorce settlement options.
To deduct any attorney fees or costs from your Charleston divorce, you must itemize your deductions on Schedule A of your Federal tax return. You can obtain more information on how to claim these miscellaneous deductions in IRS publication 529.
4. Will I get the child income tax deductions, exemptions, and credits if I win child custody?
Many people perceive incorrectly that the child tax deductions can only be claimed by the parent, who is designated as the primary custodian for a child in a Charleston divorce. The truth is that child custody and child tax benefits are separate divorce topics. As I explain in my article “Who Will Get the Child Tax Benefits in a Charleston Divorce?“, the IRS regulations and South Carolina child custody law permit your Charleston family court judge to award the child tax benefits to the custodial or non-custodial parent. For more information on how you may be able to claim the child tax benefits as part of your Charleston divorce, you should consult with a C.P.A. or divorce lawyer in Charleston, SC.
5. What is my income tax filing status while I am separated but not yet divorced?
Your income tax filing status will depend primarily on what your marital status was on December 31. Specifically, were you divorced, legally separated, or in the process of getting divorced or legally separated?
If your Charleston divorce judge entered your divorce decree or order for separate maintenance before January 1 of the new year, the IRS will treat you as being “unmarried” for the entire year. You cannot file a joint tax return with your spouse — regardless of whether your divorce judge entered your divorce decree or separate maintenance order on the first day of the year, the last day of the year, or another date during the year.
If you were divorced or you obtained an order for separate maintenance during the calendar year, your tax filing status can be “single” or “head of household.” You cannot file as “married.” For more information on your options, you should consult with a divorce attorney in Charleston, SC or review IRS Publication 501.
If you were married or living separate from your spouse in Charleston without an order of separate maintenance on December 31, you cannot claim a tax status as “single.” You and your spouse can then choose to file as: (a) married filing jointly; (b) married filing separately; or (c) head of household, if you meet certain criteria.
Many factors can determine whether your former spouse or you would benefit from filing tax returns jointly or separately. Your Charleston divorce lawyer can advise you how negotiation of your tax filing status might be utilized to your financial advantage as part of your divorce settlement negotiations.
HELP FOR YOU
As an experienced divorce lawyer in Charleston, SC,I can answer your Charleston divorce law questions.To speak directly with me, please call me now at 843-631-7117.
Alternatively, please use the contact form to ask me any questions that you may have regarding your Charleston divorce or legal separation case. I will be quick to respond.
Working together, we will protect your rights and build a better future for you in Awendaw, Charleston, Daniel Island, Goose Creek, Isle of Palms, James Island, Johns Island, Kiawah, Mount Pleasant, North Charleston, Sullivan’s Island, Summerville, or West Ashley.
Since there are so many exceptions to the general tax principles, which I discuss above, you should not rely on this information in making your tax decisions. Instead, you should seek professional advice from your tax advisor or Charleston divorce attorney on how to reduce your specific post-divorce tax liability.