Events In Life That Have A Significant Tax Impact Series: Getting Separated or Divorced
In our last week of the Events In Life That Have A Significant Tax Impact Series, we are going to discuss the tax effects of a separation or divorce on your tax liability or refund. It is important to know how a name change, alimony and child support can all affect your tax return, in order to prepare yourself for life as a separated or divorced taxpayer.
If you were divorced recently, there are a couple of things you’ll want to do to ensure that the name on your tax return matches the name registered with the Social Security Administration. A mismatch between the name on your tax return and the name registered with the Social Security Administration can cause problems in the processing of your tax return, and can even affect when you receive your refund. After a divorce, taxpayers who change back to their previous last name also need to notify the SSA of the change. Informing the SSA of a name change is quite simple. File a Form SS-5, Application for a Social Security Card at your local SSA office. It usually takes about two weeks to have the change verified.
Alimony Or Child Support
If you were recently divorced and are paying or receiving alimony under a divorce decree or agreement, you need to consider the tax implication for your 2012 federal income tax return.
Alimony payments received from your spouse or former spouse are taxable to you in the year you receive them. Because no taxes are withheld from alimony payments, you may need to make estimated tax payments or increase the amount withheld from your paycheck.
Alimony payments made under a divorce or separation instrument are deductible, if certain requirements are met. Any payments not required by such a decree or agreement do not qualify as deductible alimony payments.
·Child Support Is Not Deductible Or Taxable
Child support you pay is never deductible. Child support you receive is not taxable.
If you paid or received alimony, you must use Form 1040. You cannot use Form 1040A or Form 1040EZ. When using TaxSlayer, we will automatically select the appropriate form to fit your specific return. If you received alimony, you must give the person who paid the alimony your social security number or you may have to pay a $50 penalty.