If you live in New York and recently ended your marriage, you may wonder how this significant life event will alter your tax situation. Divorce can bring a sea change in various aspects of your life, including your tax obligations.
Grappling with such changes can seem overwhelming, especially when faced with the technical language of tax law. This FAQ will help you navigate the tax implications of your New York divorce.
Who can claim the kids as dependents?
If you have children, one of the most pressing questions may be who gets to claim them as dependents on their tax returns. In New York, the custodial parent—defined by the IRS as the parent with whom the child lived for the greater part of the year—usually claims the children. However, the noncustodial parent can claim them if both parents agree to this arrangement and fulfill the necessary requirements.
What happens to jointly owned property?
You and your ex-spouse might have shared ownership of some properties. After a divorce, the person who takes ownership of a property becomes solely responsible for the taxes. Therefore, if you receive the family home in your divorce, you will pay the taxes on it from then on.
Are alimony payments tax deductible?
Since the 2018 tax reform, individuals who pay alimony cannot deduct these payments from their federal income taxes. If you receive alimony, you will not need to report it as income. This change is a departure from prior law, so you might need to revise your tax strategies accordingly.
Will my filing status change?
Your filing status can significantly impact your tax bill. After a divorce, you can no longer file as married. If you finalize your divorce by the last day of the tax year, the IRS considers you unmarried for the whole year. You will have to file as either single or as head of household, depending on your circumstances.
Navigating the labyrinth of tax law after a divorce in New York can be complex. But you do not have to tackle these challenges alone. Tax professionals can provide expert advice, making this journey less daunting and ensuring you fulfill your obligations accurately.