Tax FAQs for Couples in Divorce

Answered by Our Rockland County Divorce Lawyers

Tax season can be confusing for New York and New Jersey couples who are in the divorce process. The following are some of the most frequently asked questions.

Can we file jointly or separately?

Answer: As long as you are still married and not legally separated by December 31st you may elect to file a joint return.

The definition of “legally separated” is governed by state law. In New York or New Jersey you are only legally separated if you have a proper written agreement that qualifies as a separation agreement or pursuant to a court order that has deemed you legally separated. 

Is filing separately the only option?

Answer: No. You might be able to file head of household or married filing separately.

Head of household status is reserved, if you provide more than half the costs of the upkeep of your home for child dependents, a parent or other qualifying individual for more than one-half of the year.

Married filing separately causes special rules to apply which may affect your ability to pick between the standard and itemized deductions.

You may qualify for a head of household status even if you are married or unmarried, but are considered unmarried on the last day of the year of the return being filed. You must live apart from your spouse for the last six months of the year and could only be “considered” unmarried pursuant to the IRS “abandoned spouse” rule (ASR).

To claim Head of Household you must also pay more than half of the costs of the home by the end of the year, and a dependent child or other relative must live with you for more than half the year.

You must file as a single taxpayer if you are legally separated as of the end of the year and you do not qualify for any other filing status.

Who claims the children?

Answer: Generally the right to claim a child as a dependency exemption belongs to the custodial parent.

If child custody is truly equally divided, the parent who has the highest adjusted gross income is entitled to the deduction.

Since 2009, it is no longer required that the custodial parent provides more than one-half the child support.

You may contract with your spouse or ex-spouse to allow one person or the other to have the right to claim the child as a dependent exemption. This agreement can be made for the current year or future years, and can be revoked if you have not signed a contract to the contrary.

Is there a capital gain if I accept the transfer of our house from my spouse?

Answer: No gain or loss is recognized for the transfer of property between spouses, if it is related to the divorce or transferred within one year of the termination of the marriage.

There are additional exceptions to this rule. Consult your divorce attorneys.