A few weeks ago we provided our readers with a two part list full of tax tips for parents. That blog focused on things like claiming dependents and the child tax credit. However, these tips aren’t much good for people who aren’t married and don’t have children. So with that in mind, we have compiled another list of helpful tax tips aimed at divorced and separated people in Michigan that could help you save a buck or two. You’re welcome.
If you get alimony, also called spousal support, from your spouse or former spouse, it is taxable in the year you that you receive it. Alimony is not subject to tax withholding, which means that you might need to increase the taxes you pay during the year to avoid a penalty at tax time. To do this, you could make estimated tax payments throughout the year, or increase the amount of tax that is withheld from your wages.
Alimony Paid Out
You can normally deduct alimony paid to a spouse or former spouse under a divorce or separation decree, regardless of whether you itemize deductions or not. However, voluntary payments made outside a divorce or separation decree are not deductible. It’s important to remember that you must enter your spouse’s Social Security Number or Individual Taxpayer Identification Number on your Form 1040 when you file your taxes.
If you get divorced and choose to change your name, you will need to notify the Social Security Administration. You will need to file Form SS-5 (Application for a Social Security Card) in order to apply for a social security card in your new name. You can find out more about the application process from the Social Security Administration’s website, or call 800-772-1213. The name on your tax return must match the name on your social security record. A mismatched name can cause problems, which may mean improper processing of your return and delayed refunds.
Spousal IRA Accounts
If you get divorced, or the court grants you a separate maintenance decree by the end of your tax year, you can’t deduct any contributions that you made to your former spouse’s traditional IRA. However, you might be able to deduct contributions that you made to your own traditional IRA. If you have a non-traditional IRA account (like a self directed IRA) we would recommend that you speak to a Certified Public Accountant for financial advice on how to proceed.
Join us next time, when we will be looking at Health Care Laws you may need to consider during tax season, and how that could affect your tax return. Until then, if you are considering tying the knot and need help with your prenuptial agreement, or perhaps untying the knot and you need help with your divorce process, we are here to help you. Our skilled Oakland County family law attorneys have decades of experience and are available to assist you with all of your divorce, custody, premarital and family law needs. Call us today at 248 306 4004 and discuss your situation with one of our experienced attorneys. We are here to help.