Several changes in tax law have occurred in recent years and many of these changes relate to divorce (such as the Domestic Relations Tax Act of 1984 and the Tax Relief Act of 1997).  Additional changes in tax law will likely occur in the near future and may also impact divorce.

One of the most common tax questions associated with divorce is which parent receives the the Dependency Exemption.  Generally, the custodial parent is entitled to claim a child as an exemption; however, the custodial parent may waive this entitlement in writing (Form 8332 allows for the release of a claim to an exemption by a custodial parent).  Custodial parent is defined as the parent having actual custody of the child for the greater portion of the tax year.  If both parents claim the same child the IRS will detect the error through the duplication of the child's social security number.  This is a very common issue that often occurs after the divorce.   

A second tax issue that is closely associated with the Dependency Exemption is the Child Tax Credit.  I.R.C. 24 provides a credit of up to $1,000 for each qualifying child under the age of 17.  A qualifying child is a child, grandchild or foster child for whom the taxpayer can claim a Dependency Exemption.  In some cases, both parents will claim the same Child Tax Credit.  This poses the same issues as when both parents claim the Dependency Exemption.

Spousal maintenance (also referred to as Alimony) can pose issues in divorce cases.  In order for spousal maintenance to be deductible it must be made pursuant to a written divorce or separation agreement. Richard J. Meyer v. Comm'r, T.C. Memo 2003-12.  The payment of spousal maintenance shifts income (and income taxes) from one spouse to the other.           

The question of when a taxpayer becomes "single" has been addressed by courts.  A taxpayer is considered "single" when the divorce is final under state law, and not before.  Even if the divorce is not final a taxpayer may qualify as head of household filing status (which is a lower tax rate than married filing separately).                         

Tax issues associated with divorce should be properly addressed by a lawyer.  Please call to speak with a lawyer regarding your specific legal situation or to schedule an office consultation.  
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Attorney & Mediator Randall A. Smith is the founder of Lake Harriet Law Office & Mediation Services, LLC.  Mr. Smith earned his B.A. Degree from Hamline University, his J.D. Degree from Drake University Law School and his M.B.A. Degree from the University of St. Thomas. 

Mr. Smith has practiced law since 1996 and is licensed in all Minnesota Courts and in United States Tax Court.  He is a Minnesota Rule 114 Neutral Mediator for Family & Civil cases and he performs Social and Financial Early Neutral Evaluations (ENE) in divorce cases.