In his latest appearance on Phoenix Money Radio’s “Business for Breakfast,” Cordell & Cordell Principal Partner Joseph Cordell reviewed several important tax tips to keep in mind following divorce.
Filing taxes after divorce can complicate an already confusing process. In the interview, Mr. Cordell reviewed whether child support or attorney fees are tax deductible, who has the right to claim children as dependents, what status to file under after divorce, and more.
Child support is not tax deductible because the IRS essentially treats the payments as if the parties had not gotten a divorce.
“In other words, you can’t deduct the cost associated with rearing your kids, unfortunately,” Mr. Cordell said. “… It’s very frustrating when guys feel like they’re writing these excessive checks to their wives and it’s labeled child support so there’s no deduction, and yet they know that their ex-wife, in many ways, is the beneficiary of that money.”
Determining whether attorney fees are deductible is a bit more complicated, Mr. Cordell explained. If there is a way to distinguish the fees associated with financial planning, then those fees are often deductible.
Who has the right to claim children as dependents is determined by whichever parent the children spend the majority of the time with. That can be waived, but it must be written into the settlement agreement.
What determines filing status is an individual’s marital status at the end of the tax year, which is December 31.
Listen to the entire interview below.
