by Sue A. Sponte

Created on: March 13, 2011   Last Updated: March 14, 2011

Of all the things going through your mind when undergoing a divorce, the tax law is probably not high in the list. But once the dust settles, it is important to take a few moments to review the ways that a divorce can affect taxes for the former spouses. The IRS publishes a pamphlet for people in this situation, Publication 504. Here are some highlights:

Filing status. As far as the IRS is concerned, your filing status is based on the last day of the tax year. If you get divorced at any point during the year, then the proper filing status is “single” for that tax year. Of course, if you remarried within that same year, then you are married again as far as the IRS is concerned. In addition, if you got divorced only for the purpose of filing tax returns, and intend to get married again to the same person next year, then you are “married” as far as the IRS is concerned, even if you are legally divorced under state law.

Dependents. A big issue for divorcing couples to ensure that they resolve any question about who will be able to claim children as dependents for tax purposes. This is normally outside the control of the parents because of what the IRS calls the residence test. A taxpayer can only claim a dependent child for tax purposes if the child lived with that parent for more than half the year. But in the year in which a divorce happens, it is theoretically possible that both parents could meet the residency test.

If both parents plus a child lived together for six months, and then the parents got divorced and divided the remaining months equally, both parents would have nine months of residency. In that case, a declaration by one parent that they will waive the right to claim the child as a qualifying child will clear the way for the other. If both parents want to claim the child, the IRS will examine the number of days that the child lived with each and will allow the one with more time with the child to claim the child. If both parents had exactly the same number of days living with the child, the IRS will let the parent with the higher adjusted gross income claim the child for dependency purposes.

Alimony. Alimony is taxable income for the recipient and deductible for the person making the payment. This fact can and should play a role in deciding about alimony and child support during the divorce proceedings. Child support is not taxable income, and cannot be deducted by the payer.

Property settlement. In general, when divorcing

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