Frequently Asked Questions

1.  Is Alimony deductible?

Generally, if all the IRS requirements are met, Alimony will be deductible to the spouse paying it and taxable income of the spouse receiving it. There are detailed rules regarding the acceleration and/or reduction of alimony payments during the first three years of the settlement, which can cause a “recapture” of these payments. There are also rules that may cause Alimony payments to be treated as Child Support if they relate to a “Contingency.”

2. Is Child Support deductible?

No, Child support is not deductible.

3. Will there be any tax relief once I become divorced?

Possibly. If you were unmarried or considered unmarried on the last day of the calendar year, you may claim Head of Household (HOH) status for the whole year, which generally provides for lower tax rates than for those who file Single of Married Filing Separate. To qualify for HOH status, you must also have paid more than half the cost of keeping up a home that was the main home for more than half of the year for you and other qualifying persons.

4. Is the transfer of the house taxable in a divorce settlement taxable?

There is no recognized gain or loss on the transfer of property (including your house) between spouses, or between former spouses, if the transfer is because of a divorce. Once again, there are special rules for nonresident aliens, certain transfers in trust and certain stock redemptions. Also, if you sell property that you own jointly to split the proceeds as part of your property settlement, certain tax rules apply. If the spouse who receives the home pursuant to a divorce decree subsequently sells the residence, he/she may be eligible to exclude up to $250,000 of the gain on the sale (www.irs.gov, publication 523).

5. Are legal and accounting fees related to a divorce deductible?

Legal fees related to a divorce action, even those related to division of property, or payment of alimony or child support, are not deductible. Legal and accounting fees for tax advice, tax preparation, or investment advice are deductible as a miscellaneous itemized deduction subject to the 2% AGI limitation.

6. Which parent can claim the Child and Dependent Care Credit?

Only the custodial parent is entitled to claim the Child and Dependent Care Credit. A noncustodial parent may not claim a Child Care Credit for expenses incurred, even if that parent is entitled to claim the exemption for the child. The parent who has custody for the longer period of time during the year is considered the custodial parent.


*** This information is provided for general information and may not contain all regulations and provisions. You should seek the advice of a tax professional prior to making decisions pertaining to your personal income tax situation. See www.irs.gov for important details.

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