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As with every other part of your life, separation and divorce impact your taxes. This is an area in which you should try your hardest to keep the lines of communication open and the emotions out. Remember to treat your divorce as a business as it will only benefit Uncle Sam if you file separate tax returns out of spite when filing jointly is beneficial. Do not assume that you will able to claim all deductions and exemptions. That will only lead to fines, penalties, and audits if you are wrong. The IRS does not care about your personal problems or that you and your (ex) spouse are unable to communicate. Make sure that you have all tax related issues settled and clearly stated in your separation agreement and or divorce decree.

The information contained on this page is for informational purposes only. Before acting upon or making any decisions based upon the information contained within this page, consult a tax professional experienced in matrimonial issues first.

FILING STATUS
How are you going to file your taxes? Determine the best way financially to do this. Normally filing a Married Joint Return will result in the lowest taxes. Do not look at a joint return as any kind of "attachment" to your spouse. This is strictly a financial situation. You qualify for the Married Filing Jointly status if you are not yet divorced. You do not qualify for this status in the tax year you were divorced.
EXEMPTIONS
You may claim a child that does not live with you only if it is stated in your divorce or separation agreement or if mutually agreed upon. This does not apply if you and your spouse are filing a Married Joint Return (see above).
DEDUCTIONS
Under certain circumstances, the amount of your legal and accounting fees paid which can be attributed to maintaining or preserving income (not child support) may be tax deductible.
ALIMONY
If you either pay or receive alimony/maintenance there are tax ramifications. Alimony/maintenance (not child support) is taxable to the recipient and deductible for the payer. Occasionally a dispute will arise as to how much alimony was paid/received. Sometime the IRS will question the alimony amounts. For that reason it is very important to keep good records. If you fail to keep adequate records you may lose the alimony tax deduction.

If you pay alimony you should keep the following records for at least three years:

Original checks. Be sure to show on each check the month the payment represents.
A list that shows the date, check number, amount and address where payment was sent.
If you give cash obtain and retain a receipt signed by both the payer and the recipient.

If you receive alimony you should keep the following for at least three years:

A photocopy of the check or money order received.
A list that shows the date, check number, amount of payment, bank account the funds are drawn on, account number against which the check is drawn on.
A copy signed receipt with signatures of both payer and recipient for any cash payment received.

CHILD SUPPORT
Is not taxable nor is it deductible.
EARNED INCOME CREDIT
If your adjusted gross income is less than $28,281 with one qualifying child or less than $32,121 with more than one qualifying child or $10,710 if you do not have a qualifying child, you may be eligible for the earned income credit. See IRS publications for additional qualifications.
CHILD CARE CREDIT
You may be able to take this credit if you paid someone to care for your child who is under age 13.
CHILD TAX CREDIT
This credit is in addition to the childcare credit and the earned income credit. With this credit you can get a refund even if you do not owe any tax. The credit can be up to $600 per child (it was $400 for the tax year 2000). To qualify for the credit you must have at least one qualifying child. According to the IRS a qualifying child for the purposes of the child tax credit is a child who:

is claimed as your dependent and
was under age 17 at the end of the tax year and
is your son, daughter, adopted child, stepchild, grandchild or foster child and
is a US citizen or resident alien.

INCOME TAX EVASION BY SPOUSE
If your spouse knowingly cheated on your joint return to evade taxes, you might not be held responsible. Effective July 22, 1998 a new tax rule went into effect whereby if you are divorced, legally separated or have been living apart from your spouse for at least 12 months, and you were unaware that your spouse lied on your joint tax return; you can file papers that would compute your tax liability separately. If you have been audited and you believe this rule applies to you contact a tax specialist who has experience with this type of matter.