Tax Info for Divorced or Separated Individuals
Publication 504 – Introductory Material
Table of Contents
For the latest information about developments related to Publication 504, such as legislation enacted after this publication was published, go to www.irs.gov/pub504.
Health care law. Under the health care law, you must have qualifying health care coverage, qualify for an exemption from qualifying health care coverage, or make a shared responsibility payment. Your divorce or separation may impact your responsibilities under the health care law. For details, see Health care law considerations .
Relief from joint liability. In some cases, one spouse may be relieved of joint liability for tax, interest, and penalties on a joint tax return. For more information, see Relief from joint liability under Married Filing Jointly.
Social security numbers for dependents. You must include on your tax return the taxpayer identification number (generally the social security number) of every person for whom you claim an exemption. See Exemptions for Dependents under Exemptions, later.
Individual taxpayer identification number (ITIN). The IRS will issue an ITIN to a nonresident or resident alien who does not have and is not eligible to get a social security number (SSN). To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. It takes about 6 to 10 weeks to get an ITIN. The ITIN is entered wherever an SSN is requested on a tax return. If you are required to include another person’s SSN on your return and that person does not have and cannot get an SSN, enter that person’s ITIN.
Change of address. If you change your mailing address, be sure to notify the Internal Revenue Service. You can use Form 8822, Change of Address.
Change of name. If you change your name, be sure to notify the Social Security Administration using Form SS-5, Application for a Social Security Card.
Change of withholding. If you have been claiming a withholding exemption for your spouse, and you divorce or legally separate with help from divorce attorneys in harrisburg pa or elsewhere, you must give your employer a new Form W-4, Employee’s Withholding Allowance Certificate, within 10 days after the divorce or separation showing the correct number of exemptions.
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
This publication explains tax rules that apply if you are divorced or separated from your spouse. It covers general filing information and can help you choose your filing status. It also can help you decide which exemptions you are entitled to claim, including exemptions for dependents.
The publication also discusses payments and transfers of property that often occur as a result of divorce and how you must treat them on your tax return. Examples include alimony, child support, other court-ordered payments, property settlements, and transfers of individual retirement arrangements. In addition, this publication also explains deductions allowed for some of the costs of obtaining a divorce and how to handle tax withholding and estimated tax payments.
The last part of the publication explains special rules that may apply to persons who live in community property states.
Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions. You can send us comments from www.irs.gov/formspubs. Click on “More Information” and then on “Give us feedback.” Or you can write to:
Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.
- 501 Exemptions, Standard Deduction, and Filing Information
- 544 Sales and Other Dispositions of Assets
- 555 Community Property
- 590-A Contributions to Individual Retirement Arrangements (IRAs)
- 590-B Distributions from Individual Retirement Arrangements (IRAs)
- 971 Innocent Spouse Relief
- 974 Premium Tax Credit
Form (and Instructions)
- 8332 Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent
- 8379 Injured Spouse Allocation
- 8857 Request for Innocent Spouse Relief
See How To Get Tax Help near the end of this publication for information about getting publications and forms.
Table of Contents
- Filing Status
- Qualified Domestic Relations Order
- Individual Retirement Arrangements
- Property Settlements
- Costs of Getting a Divorce
- Tax Withholding and Estimated Tax
- Community Property
- How To Get Tax Help
Your filing status is used in determining whether you must file a return, your standard deduction, and the correct tax. It may also be used in determining whether you can claim certain other deductions and credits. The filing status you can choose depends partly on your marital status on the last day of your tax year.
Unmarried persons. You are unmarried for the whole year if either of the following applies.
- You have obtained a final decree of divorce or separate maintenance by the last day of your tax year. You must follow your state law to determine if you are divorced or legally separated.Exception. If you and your spouse obtain a divorce in one year for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to remarry each other and do so in the next tax year, you and your spouse must file as married individuals.
- You have obtained a decree of annulment, which holds that no valid marriage ever existed. You must file amended returns (Form 1040X, Amended U.S. Individual Income Tax Return) for all tax years affected by the annulment that are not closed by the statute of limitations. The statute of limitations generally does not end until 3 years (including extensions) after the date you file your original return or within 2 years after the date you pay the tax. On the amended return you will change your filing status to single or, if you meet certain requirements, head of household.
Health care law considerations. Under the health care law, you must have qualifying health care coverage, qualify for an exemption from qualifying health care coverage, or make a shared responsibility payment. Qualifying health care coverage (also called minimum essential coverage) includes:
- Most coverage through government-sponsored programs (including Medicaid coverage, Medicare parts A or C, the Children’s Health Insurance Program (CHIP), certain benefits for veterans and their families, TRICARE, and health coverage for Peace Corps volunteers);
- Most types of employer-sponsored coverage; and
- Other health coverage the Department of Health and Human Services designates as minimum essential coverage.
Your divorce or separation may impact your responsibilities under the health care law in the following ways.
- Special Marketplace Enrollment Period. If you lose your health insurance coverage due to divorce, you are still required to have coverage for every month of the year for yourself and the dependents you can claim on your tax return. Losing coverage through a divorce is considered a qualifying life event that allows you to enroll in health coverage through the Health Insurance Marketplace during a Special Enrollment Period.
- Changes in Circumstances. If you purchase health insurance coverage through the Health Insurance Marketplace you may get advance payments of the premium tax credit in 2015. If you do, you should report changes in circumstances to your Marketplace throughout the year. Changes to report include a change in marital status, a name change and a change in your income or family size. By reporting changes, you will help make sure that you get the proper type and amount of financial assistance. This will also help you avoid getting too much or too little credit in advance.
- Shared Policy Allocation. If you divorced or are legally separated during the tax year and are enrolled in the same qualified health plan, you and your former spouse must allocate policy amounts on your separate tax returns to figure your premium tax credit and reconcile any advance payments made on your behalf. Form 8962, Premium Tax Credit, has more information about the Shared Policy Allocation.
If you are married, you and your spouse can choose to file a joint return. If you file jointly, you both must include all your income, exemptions, deductions, and credits on that return. You can file a joint return even if one of you had no income or deductions.
If both you and your spouse have income, you should usually figure your tax on both a joint return and separate returns (using the filing status of married filing separately) to see which gives the two of you the lower combined tax.
Relief from joint liability. In some cases, a spouse may be relieved of the tax, interest, and penalties on a joint return. You can ask for relief no matter how small the liability. There are three types of relief available.
- Innocent spouse relief.
- Separation of liability, which applies to joint filers who are divorced, widowed, legally separated, or who have not lived together for the 12 months ending on the date election of this relief is filed.
- Equitable relief.
Married persons who live in community property states, but who did not file joint returns, may also qualify for relief from liability for tax attributable to an item of community income or for equitable relief. See Relief from liability for tax attributable to an item of community income, later, under Community Property. Each kind of relief has different requirements. You must file Form 8857 to request relief under any of these categories. Pub. 971 explains these kinds of relief and who may qualify for them. You can also find information on our website at IRS.gov.
Injured spouse. You are an injured spouse if you file a joint return and all or part of your share of the overpayment was, or is expected to be, applied against your spouse’s past-due debts. An injured spouse can get a refund for his or her share of the overpayment that would otherwise be used to pay the past-due amount. To be considered an injured spouse, you must:
- Have made and reported tax payments (such as federal income tax withheld from wages or estimated tax payments), or claimed a refundable tax credit, such as the earned income credit or additional child tax credit on the joint return, and
- Not be legally obligated to pay the past-due amount.
If the injured spouse’s permanent home is in a community property state, then the injured spouse must only meet (2). For more information, see Pub. 555. If you are an injured spouse, you must file Form 8379 to have your portion of the overpayment refunded to you. Follow the instructions for the form. If you have not filed your joint return and you know that your joint refund will be offset, file Form 8379 with your return. You should receive your refund within 14 weeks from the date the paper return is filed or within 11 weeks from the date the return is filed electronically. If you filed your joint return and your joint refund was offset, file Form 8379 by itself. When filed after offset, it can take up to 8 weeks to receive your refund. Do not attach the previously filed tax return, but do include copies of all Forms W-2, Wage and Tax Statement, and W-2G, Certain Gambling Winnings, for both spouses and any Forms 1099 that show income tax withheld.
An injured spouse claim is different from an innocent spouse relief request. An injured spouse uses Form 8379 to request an allocation of the tax overpayment attributed to each spouse. An innocent spouse uses Form 8857 to request relief from joint liability for tax, interest, and penalties on a joint return for items of the other spouse (or former spouse) that were incorrectly reported on or omitted from the joint return. For information on innocent spouses, see Relief from joint liability, earlier.
If you and your spouse file separate returns, you should each report only your own income, exemptions, deductions, and credits on your individual return. You can file a separate return even if only one of you had income. For information on exemptions you can claim on your separate return, see Exemptions , later.
|1 For more information on a qualified home and deductible mortgage interest, see Pub. 936, Home Mortgage Interest Deduction.|
Separate returns may give you a higher tax. Some married couples file separate returns because each wants to be responsible only for his or her own tax. There is no joint liability. But in almost all instances, if you file separate returns, you will pay more combined federal tax than you would with a joint return. This is because the following special rules apply if you file a separate return.
- Your tax rate generally is higher than it would be on a joint return.
- Your exemption amount for figuring the alternative minimum tax is half of that allowed on a joint return.
- You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer’s dependent care assistance program is limited to $2,500 (instead of $5,000 on a joint return). If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. See Pub. 503 for more information.
- You cannot take the earned income credit.
- You cannot take the exclusion or credit for adoption expenses in most cases.
- You cannot take the credit for higher education expenses (American opportunity and lifetime learning credits), the deduction for student loan interest, or the tuition and fees deduction.
- You cannot exclude the interest from qualified savings bonds that you used for higher education expenses.
- If you lived with your spouse at any time during the tax year:
- You cannot claim the credit for the elderly or the disabled, and
- You will have to include in income a higher percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.
- The following credits and deductions are reduced at income levels that are half those for a joint return.
- The child tax credit.
- The retirement savings contributions credit.
- The deduction for personal exemptions.
- Itemized deductions.
- Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).
- If your spouse itemizes deductions, you cannot claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.
Filing as head of household has the following advantages.
- You can claim the standard deduction even if your spouse files a separate return and itemizes deductions.
- Your standard deduction is higher than is allowed if you claim a filing status of single or married filing separately.
- Your tax rate usually will be lower than it is if you claim a filing status of single or married filing separately.
- You may be able to claim certain credits (such as the dependent care credit and the earned income credit) you cannot claim if your filing status is married filing separately.
- Income limits that reduce your child tax credit, retirement savings contributions credit, itemized deductions, and the deduction for personal exemptions are higher than the income limits if you claim a filing status of married filing separately.
Requirements. You may be able to file as head of household if you meet all the following requirements.
- You are unmarried or “considered unmarried” on the last day of the year.
- You paid more than half the cost of keeping up a home for the year.
- A “qualifying person” lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the “qualifying person” is your dependent parent, he or she does not have to live with you. See Special rule for parent , later, under Qualifying person.
Considered unmarried. You are considered unmarried on the last day of the tax year if you meet all the following tests.
- You file a separate return. A separate return includes a return claiming married filing separately, single, or head of household filing status.
- You paid more than half the cost of keeping up your home for the tax year.
- Your spouse did not live in your home during the last 6 months of the tax year. Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. See Temporary absences , later.
- Your home was the main home of your child, stepchild, or foster child for more than half the year. (See Qualifying person , later, for rules applying to a child’s birth, death, or temporary absence during the year.)
- You must be able to claim an exemption for the child. However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rule described later in Special rule for divorced or separated parents (or parents who live apart) under Exemptions for Dependents. The general rules for claiming an exemption for a dependent are shown in Table 3.
If you were considered married for part of the year and lived in a community property state (one of the states listed later under Community Property), special rules may apply in determining your income and expenses. See Pub. 555 for more information.
|IF the person is your …||AND …||THEN that person is …|
|qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2||he or she is single||a qualifying person, whether or not you can claim an exemption for the person.|
|he or she is married and you can claim an exemption for him or her||a qualifying person.|
|he or she is married and you cannot claim an exemption for him or her||not a qualifying person.3|
|qualifying relative4 who is your father or mother||you can claim an exemption for him or her5||a qualifying person.6|
|you cannot claim an exemption for him or her||not a qualifying person.|
|qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests)||he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who don’t have to live with you in Pub. 501 and you can claim an exemption for him or her5||a qualifying person.|
|he or she did not live with you more than half the year||not a qualifying person.|
|he or she is not related to you in one of the ways listed under Relatives who don’t have to live with you in Pub. 501 and is your qualifying relative only because he or she lived with you all year as a member of your household||not a qualifying person.|
|you cannot claim an exemption for him or her||not a qualifying person.|
|1 A person cannot qualify more than one taxpayer to use the head of household filing status for the year.|
|2 See Table 3 for the tests that must be met to be a qualifying child. Note. If you are a noncustodial parent, the term “qualifying child” for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of Divorced or Separated Parents (or Parents Who Live Apart) under Exemptions for Dependents, later. If you are the custodial parent and those rules apply, the child is generally your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption.|
|3 This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone else’s return.|
|4 See Table 3 for the tests that must be met to be a qualifying relative.|
|5 If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. See Multiple Support Agreement in Pub. 501.|
|6 See Special rule for parent .|
Kidnapped child. You may be eligible to file as head of household even if the child who is your qualifying person has been kidnapped. You can claim head of household filing status if all the following statements are true.
- The child is presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child’s family.
- In the year of the kidnapping, the child lived with you for more than half the part of the year before the kidnapping.
- You would have qualified for head of household filing status if the child had not been kidnapped.
This treatment applies for all years until the earliest of:
- The year the child is returned,
- The year there is a determination that the child is dead, or
- The year the child would have reached age 18.
You can deduct $4,000 for each exemption you claim in 2015. However, if your adjusted gross income is more than $154,950, see Phaseout of Exemptions , later.
There are two types of exemptions: personal exemptions and exemptions for dependents. If you are entitled to claim an exemption for a dependent (such as your child), that dependent cannot claim his or her personal exemption on his or her own tax return.
You can claim your own exemption unless someone else can claim it. If you are married, you may be able to take an exemption for your spouse. These are called personal exemptions.
Your spouse is never considered your dependent.
You are allowed one exemption for each person you can claim as a dependent. You can claim an exemption for a dependent even if your dependent files a return.
- A qualifying child, or
- A qualifying relative.
Table 3 shows the tests that must be met to be either a qualifying child or qualifying relative, plus the additional requirements for claiming an exemption for a dependent. For detailed information, see Pub. 501.
Dependent not allowed a personal exemption. If you can claim an exemption for your dependent, the dependent cannot claim his or her own exemption on his or her own tax return. This is true even if you do not claim the dependent’s exemption on your return. It is also true if the decedent’s exemption on your return is reduced or eliminated under the phaseout rule described under Phaseout of Exemptions, later.
|•||You cannot claim any dependents if you, or your spouse if filing jointly, could be claimed as a dependent by another taxpayer.|
|•||You cannot claim a married person who files a joint return as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid.|
|•||You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.1|
|•||You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative.|
|Tests To Be a Qualifying Child||Tests To Be a Qualifying Relative|
|The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.|
The child must be (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly), or (c) any age if permanently and totally disabled.
The child must have lived with you for more than half of the year.2
The child must not have provided more than half of his or her own support for the year.
The child is not filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid).
|The person cannot be your qualifying child or the qualifying child of anyone else.|
The person either (a) must be related to you in one of the ways listed under Relatives who don’t have to live with you in Pub. 501 or (b) must live with you all year as a member of your household 2 (and your relationship must not violate local law).
The person’s gross income for the year must be less than $4,000.3
You must provide more than half of the person’s total support for the year.4
|If the child meets the rules to be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child. See Qualifying Child of More Than One Person , later, to find out which person is the person entitled to claim the child as a qualifying child.|
|1 Exception exists for certain adopted children.|
|2 Exceptions exist for temporary absences, children who were born or died during the year, children of divorced or separated parents (or parents who live apart), and kidnapped children.|
|3 Exception exists for persons who are disabled and have income from a sheltered workshop.|
|4 Exceptions exist for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children. See Pub. 501.|
You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year if you claimed an exemption for that child. For more information, see the instructions for your tax return if you file Form 1040A or 1040.
In most cases, because of the residency test (see item 3 under Tests To Be a Qualifying Child in Table 3), a child of divorced or separated parents is the qualifying child of the custodial parent. However, the child will be treated as the qualifying child of the noncustodial parent if the rule for children of divorced or separated parents (or parents who live apart)(discussed next) applies.
Children of divorced or separated parents (or parents who live apart). A child will be treated as the qualifying child of his or her noncustodial parent if all four of the following statements are true.
- The parents:
- Are divorced or legally separated under a decree of divorce or separate maintenance,
- Are separated under a written separation agreement, or
- Lived apart at all times during the last 6 months of the year, whether or not they are or were married.
- The child received over half of his or her support for the year from the parents.
- The child is in the custody of one or both parents for more than half of the year.
- Either of the following applies.
- The custodial parent signs a written declaration, discussed later, that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches this written declaration to his or her return. (If the decree or agreement went into effect after 1984, see Divorce decree or separation agreement that went into effect after 1984 and before 2009 , or Post-2008 divorce decree or separation agreement , later.
- A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2015 states that the noncustodial parent can claim the child as a dependent, the decree or agreement was not changed after 1984 to say the noncustodial parent cannot claim the child as a dependent, and the noncustodial parent provides at least $600 for the child’s support during 2015. See Child support under pre-1985 agreement , later.
Custodial parent and noncustodial parent. The custodial parent is the parent with whom the child lived for the greater number of nights during the year. The other parent is the noncustodial parent. If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater number of nights during the rest of the year. A child is treated as living with a parent for a night if the child sleeps:
- At that parent’s home, whether or not the parent is present, or
- In the company of the parent, when the child does not sleep at a parent’s home (for example, the parent and child are on vacation together).
Example 1 – child lived with one parent greater number of nights.
You and your child’s other parent are divorced. In 2015, your child lived with you 210 nights and with the other parent 155 nights. You are the custodial parent.
Example 2 – child is away at camp.
In 2015, your daughter lives with each parent for alternate weeks. In the summer, she spends 6 weeks at summer camp. During the time she is at camp, she is treated as living with you for 3 weeks and with her other parent, your ex-spouse, for 3 weeks because this is how long she would have lived with each parent if she had not attended summer camp.
Example 3 – child lived same number of days with each parent.
Your son lived with you 180 nights during the year and lived the same number of nights with his other parent, your ex-spouse. Your adjusted gross income is $40,000. Your ex-spouse’s adjusted gross income is $25,000. You are treated as your son’s custodial parent because you have the higher adjusted gross income.
Example 4 – child is at parent’s home but with other parent.
Your son normally lives with you during the week and with his other parent, your ex-spouse, every other weekend. You become ill and are hospitalized. The other parent lives in your home with your son for 10 consecutive days while you are in the hospital. Your son is treated as living with you during this 10-day period because he was living in your home.
Example 5 – child emancipated in May.
When your son turned age 18 in May 2015, he became emancipated under the law of the state where he lives. As a result, he is not considered in the custody of his parents for more than half of the year. The special rule for children of divorced or separated parents (or parents who live apart) does not apply.
Example 6 – child emancipated in August.
Your daughter lives with you from January 1, 2015, until May 31, 2015, and lives with her other parent, your ex-spouse, from June 1, 2015, through the end of the year. She turns 18 and is emancipated under state law on August 1, 2015. Because she is treated as not living with either parent beginning on August 1, she is treated as living with you the greater number of nights in 2015. You are the custodial parent.
Divorce decree or separation agreement that went into effect after 1984 and before 2009. If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. The decree or agreement must state all three of the following.
- The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support.
- The custodial parent will not claim the child as a dependent for the year.
- The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent.
The noncustodial parent must attach all of the following pages of the decree or agreement to his or her return.
- The cover page (write the other parent’s social security number on this page).
- The pages that include all of the information identified in items (1) through (3) above.
- The signature page with the other parent’s signature and the date of the agreement.
Post-2008 divorce decree or separation agreement. If the decree or agreement went into effect after 2008, a noncustodial parent claiming an exemption for a child cannot attach pages from a divorce decree or separation agreement instead of Form 8332. The custodial parent must sign either a Form 8332 or a similar statement. The only purpose of this statement must be to release the custodial parent’s claim to the child’s exemption. The noncustodial parent must attach a copy to his or her return. The form or statement must release the custodial parent’s claim to the child without any conditions. For example, the release must not depend on the noncustodial parent paying support.
The noncustodial parent must attach the required information even if it was filed with a return in an earlier year.
Child support under pre-1985 agreement. All child support payments actually received from the noncustodial parent under a pre-1985 agreement are considered used for the support of the child.
If your qualifying child is not a qualifying child of anyone else, this topic does not apply to you and you do not need to read about it. This is also true if your qualifying child is not a qualifying child of anyone else except your spouse with whom you plan to file a joint return.
If a child is treated as the qualifying child of the noncustodial parent under the rules for Children of divorced or separated parents (or parents who live apart), earlier, see Applying the tiebreaker rules to divorced or separated parents (or parents who live apart), later.Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. (For a description of these tests, see list items 1 through 5 under Tests To Be a Qualifying Child in Table 3). Although the child meets the conditions to be a qualifying child of each of these persons, only one person can actually use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit).
- The exemption for the child.
- The child tax credit.
- Head of household filing status.
- The credit for child and dependent care expenses.
- The exclusion from income for dependent care benefits.
- The earned income credit.
The other person cannot take any of these benefits based on this qualifying child. In other words, you and the other person cannot agree to divide these tax benefits between you. The other person cannot take any of these tax benefits unless he or she has a different qualifying child.
Tiebreaker rules. To determine which person can treat the child as a qualifying child to claim these six tax benefits, the following tiebreaker rules apply.
- If only one of the persons is the child’s parent, the child is treated as the qualifying child of the parent.
- If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents.
- If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year.
- If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year.
- If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person’s AGI is higher than the highest AGI of any of the child’s parents who can claim the child. If the child’s parents file a joint return with each other, this rule can be applied by dividing the parents’ total AGI evenly between them; see Pub. 501 for details.
Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child.
Example 1-separated parents.
You, your husband, and your 10-year-old son lived together until August 1, 2015, when your husband moved out of the household. In August and September, your son lived with you. For the rest of the year, your son lived with your husband, the boy’s father. Your son is a qualifying child of both you and your husband because your son lived with each of you for more than half the year and because he met the relationship, age, support, and joint return tests for both of you. At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the rule for children of divorced or separated parents (or parents who live apart) does not apply.
You and your husband will file separate returns. Your husband agrees to let you treat your son as a qualifying child. This means, if your husband does not claim your son as a qualifying child, you can claim your son as a dependent and treat him as a qualifying child for the child tax credit and exclusion for dependent care benefits, if you qualify for each of those tax benefits. However, you cannot claim head of household filing status because you and your husband did not live apart the last 6 months of the year. And, as a result of your filing status being married filing separately, you cannot claim the earned income credit or the credit for child and dependent care expenses.
Example 2-separated parents claim same child.
The facts are the same as in Example 1 except that you and your husband both claim your son as a qualifying child. In this case, only your husband will be allowed to treat your son as a qualifying child. This is because, during 2015, the boy lived with him longer than with you. If you claimed an exemption or the child tax credit for your son, the IRS will disallow your claim to both these tax benefits. If you do not have another qualifying child or dependent, the IRS will also disallow your claim to the exclusion for dependent care benefits. In addition, because you and your husband did not live apart the last 6 months of the year, your husband cannot claim head of household filing status. And, as a result of his filing status being married filing separately, he cannot claim the earned income credit or the credit for child and dependent care expenses.
You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Your AGI is $10,000. Your mother’s AGI is $25,000. Your son’s father does not live with you or your son. Under the rules for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child if he meets all the requirements to do so. Because of this, you cannot claim an exemption or the child tax credit for your son. However, your son’s father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the earned income credit.
You and your mother did not have any child care expenses or dependent care benefits, but the boy is a qualifying child of both you and your mother for head of household filing status and the earned income credit because he meets the relationship, age, residency, support, and joint return tests for both you and your mother. (Note: The support test does not apply for the earned income credit.) However, you agree to let your mother claim your son. This means she can claim him for head of household filing status and the earned income credit if she qualifies for each and if you do not claim him as a qualifying child for the earned income credit. (You cannot claim head of household filing status because your mother paid the entire cost of keeping up the home.)
The facts are the same as in Example 1 except that your AGI is $25,000 and your mother’s AGI is $21,000. Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours.
The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the earned income credit. Your mother also claims him as a qualifying child for head of household filing status. You, as the child’s parent, will be the only one allowed to claim your son as a qualifying child for the earned income credit. The IRS will disallow your mother’s claim to the earned income credit and head of household filing status unless she has another qualifying child.
The amount you can claim as a deduction for exemptions is reduced once your adjusted gross income (AGI) goes above a certain level for your filing status. These levels are as follows:
|Filing Status||AGI Level|
|Married filing separately||$154,950|
|Head of household||284,050|
|Married filing jointly||309,900|
You must reduce the dollar amount of your exemptions by 2% for each $2,500, or part of $2,500 ($1,250 if you are married filing separately), that your AGI exceeds the amount shown above for your filing status. If your AGI exceeds the amount shown above by more than $122,500 ($61,250 if married filing separately), the amount of your deduction for exemptions is reduced to zero.
If your AGI exceeds the level for your filing status, use the Deduction for Exemptions Worksheet found in the instructions for Form 1040 or Form 1040NR to figure the amount of your deduction for exemptions.
Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. It does not include voluntary payments that are not made under a divorce or separation instrument.
Alimony is deductible by the payer, and the recipient must include it in income. Although this discussion is generally written for the payer of the alimony, the recipient also can use the information to determine whether an amount received is alimony.
To be alimony, a payment must meet certain requirements. There are some differences between the requirements that apply to payments under instruments executed after 1984 and to payments under instruments executed before 1985. The general requirements that apply to payments regardless of when the divorce or separation instrument was executed and the specific requirements that apply to post-1984 instruments (and, in certain cases, some pre-1985 instruments) are discussed in this publication. See Instruments Executed Before 1985 , later, if you are looking for information on where to find the specific requirements that apply to pre-1985 instruments.
Divorce or separation instrument. The term “divorce or separation instrument” means:
- A decree of divorce or separate maintenance or a written instrument incident to that decree,
- A written separation agreement, or
- A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement).
Amended instrument. An amendment to a divorce decree may change the nature of your payments. Amendments are not ordinarily retroactive for federal tax purposes. However, a retroactive amendment to a divorce decree correcting a clerical error to reflect the original intent of the court will generally be effective retroactively for federal tax purposes.
A court order retroactively corrected a mathematical error under your divorce decree to express the original intent to spread the payments over more than 10 years. This change also is effective retroactively for federal tax purposes.
Your original divorce decree did not fix any part of the payment as child support. To reflect the true intention of the court, a court order retroactively corrected the error by designating a part of the payment as child support. The amended order is effective retroactively for federal tax purposes.
Enter the amount of alimony you paid on Form 1040, line 31a. In the space provided on line 31b, enter your spouse’s social security number (SSN) or IRS individual taxpayer identification number (ITIN).
If you paid alimony to more than one person, enter the SSN or ITIN of one of the recipients. Show the SSN or ITIN and amount paid to each other recipient on an attached statement. Enter your total payments on line 31a.
If you do not provide your spouse’s SSN or ITIN, you may have to pay a $50 penalty and your deduction may be disallowed.
Reporting alimony received. Report alimony you received as income on Form 1040, line 11, or on Schedule NEC (Form 1040NR), line 12. You cannot use Form 1040A, 1040EZ, or 1040NR-EZ.
You must give the person who paid the alimony your SSN or ITIN. If you do not, you may have to pay a $50 penalty.
The following rules apply to alimony regardless of when the divorce or separation instrument was executed.
Payments not alimony. Not all payments under a divorce or separation instrument are alimony. Alimony does not include:
- Child support,
- Noncash property settlements,
- Payments that are your spouse’s part of community income, as explained later under Community Property ,
- Payments to keep up the payer’s property, or
- Use of the payer’s property.
Under your written separation agreement, your spouse lives rent-free in a home you own and you must pay the mortgage, real estate taxes, insurance, repairs, and utilities for the home. Because you own the home and the debts are yours, your payments for the mortgage, real estate taxes, insurance, and repairs are not alimony. Neither is the value of your spouse’s use of the home. If you have paid off your initial mortgage but have had to re-mortgage the house, you will need to take that into account, if money issues arise, you may have to sell your mortgage note for a cash sum. Check out https://www.amerinotexchange.com/what-is-a-mortgage-note/ for more information about this.
If they otherwise qualify, you can deduct the payments for utilities as alimony. Your spouse must report them as income. If you itemize deductions, you can deduct the real estate taxes and, if the home is a qualified home, you can also include the interest on the mortgage in figuring your deductible interest. However, if your spouse owned the home, see Example 2 under Payments to a third party, later. If you owned the home jointly with your spouse, see Table 4. For more information on a qualified home and deductible mortgage interest, see Pub. 936, Home Mortgage Interest Deduction.
Underpayment. If both alimony and child support payments are called for by your divorce or separation instrument, and you pay less than the total required, the payments apply first to child support and then to alimony.
Your divorce decree calls for you to pay your former spouse $200 a month ($2,400 ($200 x 12) a year) as child support and $150 a month ($1,800 ($150 x 12) a year) as alimony. If you pay the full amount of $4,200 ($2,400 + $1,800) during the year, you can deduct $1,800 as alimony and your former spouse must report $1,800 as alimony received. If you pay only $3,600 during the year, $2,400 is child support. You can deduct only $1,200 ($3,600 – $2,400) as alimony and your former spouse must report $1,200 as alimony received.
Payments to a third party. Cash payments, checks, or money orders to a third party on behalf of your spouse under the terms of your divorce or separation instrument can be alimony, if they otherwise qualify. These include payments for your spouse’s medical expenses, housing costs (rent, utilities, etc.), taxes, tuition, etc. The payments are treated as received by your spouse and then paid to the third party.
Under your divorce decree, you must pay your former spouse’s medical and dental expenses. If the payments otherwise qualify, you can deduct them as alimony on your return. Your former spouse must report them as alimony received and can include them in figuring deductible medical expenses.
Under your separation agreement, you must pay the real estate taxes, mortgage payments, and insurance premiums on a home owned by your spouse. If they otherwise qualify, you can deduct the payments as alimony on your return, and your spouse must report them as alimony received. If itemizing deductions, your spouse can deduct the real estate taxes and, if the home is a qualified home, also include the interest on the mortgage in figuring deductible interest. However, if you owned the home, see the example under Payments not alimony, earlier. If you owned the home jointly with your spouse, see Table 4.
|IF you must pay all of the …||AND your home is …||THEN you can deduct and your spouse (or former spouse) must include as alimony …||AND you can claim as an itemized deduction …|
|mortgage payments (principal and interest)||jointly owned||half of the total payments||half of the interest as interest expense (if the home is a qualified home).1|
|real estate taxes and home insurance||held as tenants in common||half of the total payments||half of the real estate taxes2 and none of the home insurance.|
|held as tenants by the entirety or in joint tenancy||none of the payments||all of the real estate taxes and none of the home insurance.|
The following rules for alimony apply to payments under divorce or separation instruments executed after 1984.
Exception for instruments executed before 1985. There are two situations where the rules for instruments executed after 1984 apply to instruments executed before 1985.
- A divorce or separation instrument executed before 1985 and then modified after 1984 to specify that the after-1984 rules will apply.
- A temporary divorce or separation instrument executed before 1985 and incorporated into, or adopted by, a final decree executed after 1984 that:
- Changes the amount or period of payment, or
- Adds or deletes any contingency or condition.
For the rules for alimony payments under pre-1985 instruments not meeting these exceptions, see the 2004 revision of Pub. 504 available at www.irs.gov/formspubs.
In November 1984, you and your former spouse executed a written separation agreement. In February 1985, a decree of divorce was substituted for the written separation agreement. The decree of divorce did not change the terms for the alimony you pay your former spouse. The decree of divorce is treated as executed before 1985. Alimony payments under this decree are not subject to the rules for payments under instruments executed after 1984.
The facts are the same as in Example 1 except that the decree of divorce changed the amount of the alimony. In this example, the decree of divorce is not treated as executed before 1985. The alimony payments are subject to the rules for payments under instruments executed after 1984.
A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other and all the following requirements are met.
- The payment is in cash.
- The instrument does not designate the payment as not alimony.
- The spouses are not members of the same household at the time the payments are made. This requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance.
- There is no liability to make any payment (in cash or property) after the death of the recipient spouse.
- The payment is not treated as child support.
Each of these requirements is discussed next.
Cash payment requirement. Only cash payments, including checks and money orders, qualify as alimony. The following do not qualify as alimony.
- Transfers of services or property (including a debt instrument of a third party or an annuity contract).
- Execution of a debt instrument by the payer.
- The use of the payer’s property.
Payments to a third party. Cash payments to a third party under the terms of your divorce or separation instrument can qualify as cash payments to your spouse. See Payments to a third party under General Rules, earlier. Also, cash payments made to a third party at the written request of your spouse may qualify as alimony if all the following requirements are met.
- The payments are in lieu of payments of alimony directly to your spouse.
- The written request states that both spouses intend the payments to be treated as alimony.
- You receive the written request from your spouse before you file your return for the year you made the payments.
Liability for payments after death of recipient spouse. If any part of payments you make must continue to be made for any period after your spouse’s death, that part of your payments is not alimony whether made before or after the death. If all of the payments would continue, then none of the payments made before or after the death are alimony. The divorce or separation instrument does not have to expressly state that the payments cease upon the death of your spouse if, for example, the liability for continued payments would end under state law.
You must pay your former spouse $10,000 in cash each year for 10 years. Your divorce decree states that the payments will end upon your former spouse’s death. You must also pay your former spouse or your former spouse’s estate $20,000 in cash each year for 10 years. The death of your spouse would not end these payments under state law.
The $10,000 annual payments may qualify as alimony. The $20,000 annual payments that do not end upon your former spouse’s death are not alimony.
Substitute payments. If you must make any payments in cash or property after your spouse’s death as a substitute for continuing otherwise qualifying payments before the death, the otherwise qualifying payments are not alimony. To the extent that your payments begin, accelerate, or increase because of the death of your spouse, otherwise qualifying payments you made may be treated as payments that were not alimony. Whether or not such payments will be treated as not alimony depends on all the facts and circumstances.
Under your divorce decree, you must pay your former spouse $30,000 annually. The payments will stop at the end of 6 years or upon your former spouse’s death, if earlier.
Your former spouse has custody of your minor children. The decree provides that if any child is still a minor at your spouse’s death, you must pay $10,000 annually to a trust until the youngest child reaches the age of majority. The trust income and corpus (principal) are to be used for your children’s benefit.
These facts indicate that the payments to be made after your former spouse’s death are a substitute for $10,000 of the $30,000 annual payments. Of each of the $30,000 annual payments, $10,000 is not alimony.
Under your divorce decree, you must pay your former spouse $30,000 annually. The payments will stop at the end of 15 years or upon your former spouse’s death, if earlier. The decree provides that if your former spouse dies before the end of the 15-year period, you must pay the estate the difference between $450,000 ($30,000 × 15) and the total amount paid up to that time. For example, if your spouse dies at the end of the tenth year, you must pay the estate $150,000 ($450,000 − $300,000).
These facts indicate that the lump-sum payment to be made after your former spouse’s death is a substitute for the full amount of the $30,000 annual payments. None of the annual payments are alimony. The result would be the same if the payment required at death were to be discounted by an appropriate interest factor to account for the prepayment.
Specifically designated as child support. A payment will be treated as specifically designated as child support to the extent that the payment is reduced either:
- On the happening of a contingency relating to your child, or
- At a time that can be clearly associated with the contingency.
A payment may be treated as specifically designated as child support even if other separate payments are specifically designated as child support.
Contingency relating to your child. A contingency relates to your child if it depends on any event relating to that child. It does not matter whether the event is certain or likely to occur. Events relating to your child include the child’s:
- Becoming employed,
- Leaving the household,
- Leaving school,
- Marrying, or
- Reaching a specified age or income level.
Clearly associated with a contingency. Payments that would otherwise qualify as alimony are presumed to be reduced at a time clearly associated with the happening of a contingency relating to your child only in the following situations.
- The payments are to be reduced not more than 6 months before or after the date the child will reach 18, 21, or local age of majority.
- The payments are to be reduced on two or more occasions that occur not more than 1 year before or after a different one of your children reaches a certain age from 18 to 24. This certain age must be the same for each child, but need not be a whole number of years.
In all other situations, reductions in payments are not treated as clearly associated with the happening of a contingency relating to your child. Either you or the IRS can overcome the presumption in the two situations above. This is done by showing that the time at which the payments are to be reduced was determined independently of any contingencies relating to your children. For example, if you can show that the period of alimony payments is customary in the local jurisdiction, such as a period equal to one-half of the duration of the marriage, you can overcome the presumption and may be able to treat the amount as alimony.
If your alimony payments decrease or end during the first 3 calendar years, you may be subject to the recapture rule. If you are subject to this rule, you have to include in income in the third year part of the alimony payments you previously deducted. Your spouse can deduct in the third year part of the alimony payments he or she previously included in income.
The 3-year period starts with the first calendar year you make a payment qualifying as alimony under a decree of divorce or separate maintenance or a written separation agreement. Do not include any time in which payments were being made under temporary support orders. The second and third years are the next 2 calendar years, whether or not payments are made during those years.
The reasons for a reduction or end of alimony payments that can require a recapture include:
- A change in your divorce or separation instrument,
- A failure to make timely payments,
- A reduction in your ability to provide support, or
- A reduction in your spouse’s support needs.
When to apply the recapture rule. You are subject to the recapture rule in the third year if the alimony you pay in the third year decreases by more than $15,000 from the second year or the alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year. When you figure a decrease in alimony, do not include the following amounts.
- Payments made under a temporary support order.
- Payments required over a period of at least 3 calendar years that vary because they are a fixed part of your income from a business or property, or from compensation for employment or self-employment.
- Payments that decrease because of the death of either spouse or the remarriage of the spouse receiving the payments before the end of the third year.
You pay your former spouse $50,000 alimony the first year, $39,000 the second year, and $28,000 the third year. You complete Worksheet 1, illustrated later. In the third year, you report $1,500 as income on Form 1040, line 11, and your former spouse reports $1,500 as a deduction on Form 1040, line 31a.
|Note. Do not enter less than -0- on any line.|
|1.||Alimony paid in 2nd year||1.|
|2.||Alimony paid in 3rd year||2.|
|4.||Add lines 2 and 3||4.|
|5.||Subtract line 4 from line 1. If zero or less, enter -0-||5.|
|6.||Alimony paid in 1st year||6.|
|7.||Adjusted alimony paid in 2nd year|
(line 1 minus line 5)
|8.||Alimony paid in 3rd year||8.|
|9.||Add lines 7 and 8||9.|
|10.||Divide line 9 by 2||10.|
|12.||Add lines 10 and 11||12.|
|13.||Subtract line 12 from line 6||13.|
|14.||Recaptured alimony. Add lines 5 and 13||*14.|
|* If you deducted alimony paid, report this amount as income on Form 1040, line 11.|
If you reported alimony received, deduct this amount on Form 1040, line 31a.
|Note. Do not enter less than -0- on any line.|
|1.||Alimony paid in 2nd year||1.||$39,000|
|2.||Alimony paid in 3rd year||2.||28,000|
|4.||Add lines 2 and 3||4.||43,000|
|5.||Subtract line 4 from line 1. If zero or less, enter -0-||5.||-0-|
|6.||Alimony paid in 1st year||6.||50,000|
|7.||Adjusted alimony paid in 2nd year|
(line 1 minus line 5)
|8.||Alimony paid in 3rd year||8.||28,000|
|9.||Add lines 7 and 8||9.||67,000|
|10.||Divide line 9 by 2||10.||33,500|
|12.||Add lines 10 and 11||12.||48,500|
|13.||Subtract line 12 from line 6||13.||1,500|
|14.||Recaptured alimony. Add lines 5 and 13||*14.||1,500|
|* If you deducted alimony paid, report this amount as income on Form 1040, line 11.|
If you reported alimony received, deduct this amount on Form 1040, line 31a.
Information on pre-1985 instruments was included in this publication through 2004. If you need the 2004 revision, please visitwww.irs.gov/formspubs.
A qualified domestic relations order (QDRO) is a judgment, decree, or court order (including an approved property settlement agreement) issued under a state’s domestic relations law that:
- Recognizes someone other than a participant as having a right to receive benefits from a qualified retirement plan (such as most pension and profit-sharing plans) or a tax-sheltered annuity,
- Relates to payment of child support, alimony, or marital property rights to a spouse, former spouse, child, or other dependent of the participant, and
- Specifies certain information, including the amount or part of the participant’s benefits to be paid to the participant’s spouse, former spouse, child, or other dependent.
The following discussions explain some of the effects of divorce or separation on traditional individual retirement arrangements (IRAs). Traditional IRAs are IRAs other than Roth or SIMPLE IRAs.
Generally, there is no recognized gain or loss on the transfer of property between spouses, or between former spouses if the transfer is because of a divorce. You may, however, have to report the transaction on a gift tax return. See Gift Tax on Property Settlements , later. If you sell property, using services such as https://www.housebuyersofamerica.com/, that you own jointly to split the proceeds as part of your property settlement, see Sale of Jointly-Owned Property , later.
Generally, no gain or loss is recognized on a transfer of property from you to (or in trust for the benefit of):
- Your spouse, or
- Your former spouse, but only if the transfer is incident to your divorce.
This rule applies even if the transfer was in exchange for cash, the release of marital rights, the assumption of liabilities, or other consideration.
Exceptions to nonrecognition rule. This rule does not apply in the following situations.
- Your spouse or former spouse is a nonresident alien.
- Certain transfers in trust, discussed later.
- Certain stock redemptions under a divorce or separation instrument or a valid written agreement that are taxable under applicable tax law, as discussed in Regulations section 1.1041-2.
Incident to divorce. A property transfer is incident to your divorce if the transfer:
- Occurs within 1 year after the date your marriage ends, or
- Is related to the end of your marriage.
A divorce, for this purpose, includes the end of your marriage by annulment or due to violations of state laws.
Related to end of marriage. A property transfer is related to the end of your marriage if both of the following conditions apply.
- The transfer is made under your original or modified divorce or separation instrument.
- The transfer occurs within 6 years after the date your marriage ends.
Unless these conditions are met, the transfer is presumed not to be related to the end of your marriage. However, this presumption will not apply if you can show that the transfer was made to carry out the division of property owned by you and your spouse at the time your marriage ended. For example, the presumption will not apply if you can show that the transfer was made more than 6 years after the end of your marriage because of business or legal factors which prevented earlier transfer of the property and the transfer was made promptly after those factors were taken care of.
Transfers to third parties. If you transfer property to a third party on behalf of your spouse (or former spouse, if incident to your divorce), the transfer is treated as two transfers.
- A transfer of the property from you to your spouse or former spouse.
- An immediate transfer of the property from your spouse or former spouse to the third party.
You do not recognize gain or loss on the first transfer. Instead, your spouse or former spouse may have to recognize gain or loss on the second transfer. For this treatment to apply, the transfer from you to the third party must be one of the following.
- Required by your divorce or separation instrument.
- Requested in writing by your spouse or former spouse.
- Consented to in writing by your spouse or former spouse. The consent must state that both you and your spouse or former spouse intend the transfer to be treated as a transfer from you to your spouse or former spouse subject to the rules of Internal Revenue Code section 1041. You must receive the consent before filing your tax return for the year you transfer the property.
This treatment does not apply to transfers to which Regulations section 1.1041-2 (certain stock redemptions) applies.
Transfers in trust. If you make a transfer of property in trust for the benefit of your spouse (or former spouse, if incident to your divorce), you generally do not recognize any gain or loss. However, you must recognize gain or loss if, incident to your divorce, you transfer an installment obligation in trust for the benefit of your former spouse. For information on the disposition of an installment obligation, see Pub. 537, Installment Sales. You also must recognize as gain on the transfer of property in trust the amount by which the liabilities assumed by the trust, plus the liabilities to which the property is subject, exceed the total of your adjusted basis in the transferred property.
When you transfer property to your spouse (or former spouse, if incident to your divorce), you must give your spouse sufficient records to determine the adjusted basis and holding period of the property on the date of the transfer. If you transfer investment credit property with recapture potential, you also must provide sufficient records to determine the amount and period of the recapture.
Basis of property received. Your basis in property received from your spouse (or former spouse, if incident to your divorce) is the same as your spouse’s adjusted basis. This applies for determining either gain or loss when you later dispose of the property. It applies whether the property’s adjusted basis is less than, equal to, or greater than either its value at the time of the transfer or any consideration you paid. It also applies even if the property’s liabilities are more than its adjusted basis. This rule generally applies to all property received after July 18, 1984, under a divorce or separation instrument in effect after that date. It also applies to all other property received after 1983 for which you and your spouse (or former spouse) made a “section 1041 election” to apply this rule. For information about how to make that election, see Temporary Regulations section 1.1041-1T(g).
Karen and Don owned their home jointly. Karen transferred her interest in the home to Don as part of their property settlement when they divorced last year. Don’s basis in the interest received from Karen is her adjusted basis in the home. His total basis in the home is their joint adjusted basis.
Property received before July 19, 1984. Your basis in property received in settlement of marital support rights before July 19, 1984, or under an instrument in effect before that date (other than property for which you and your spouse (or former spouse) made a “section 1041 election“) is its fair market value when you received it.
Larry and Gina owned their home jointly before their divorce in 1983. That year, Gina received Larry’s interest in the home in settlement of her marital support rights. Gina’s basis in the interest received from Larry is the part of the home’s fair market value proportionate to that interest. Her total basis in the home is that part of the fair market value plus her adjusted basis in her own interest.
Property transferred in trust. If the transferor recognizes gain on property transferred in trust, as described earlier under Transfers in trust, the trust’s basis in the property is increased by the recognized gain.
The federal gift tax does not apply to most transfers of property between spouses, or between former spouses because of divorce. The transfers usually qualify for one or more of the exceptions explained in this discussion. However, if your transfer of property does not qualify for an exception, or qualifies only in part, you must report it on a gift tax return. See Gift Tax Return , later.
For more information about the federal gift tax, see Estate and Gift Taxes in Pub. 559, Survivors, Executors, and Administrators, and Form 709 and its instructions.
Your transfer of property to your spouse or former spouse is not subject to gift tax if it meets any of the following exceptions.
- It is made in settlement of marital support rights.
- It qualifies for the marital deduction.
- It is made under a divorce decree.
- It is made under a written agreement, and you are divorced within a specified period.
- It qualifies for the annual exclusion.
Marital deduction. A transfer of property to your spouse before receiving a final decree of divorce or separate maintenance is not subject to gift tax. However, this exception does not apply to:
- Transfers of certain terminable interests, or
- Transfers to your spouse if your spouse is not a U.S. citizen.
Report a transfer of property subject to gift tax on Form 709. Generally, Form 709 is due April 15 following the year of the transfer.
If you sell property that you and your spouse own jointly, you must report your share of the recognized gain or loss on your income tax return for the year of the sale. Your share of the gain or loss is determined by your state law governing ownership of property. For information on reporting gain or loss, see Pub. 544.
You cannot deduct legal fees and court costs for getting a divorce. But you may be able to deduct legal fees paid for tax advice in connection with a divorce and legal fees to get alimony. In addition, you may be able to deduct fees you pay to appraisers, actuaries, and accountants for services in determining your correct tax or in helping to get alimony.
Fees you pay may include charges that are deductible and charges that are not deductible. You should request a breakdown showing the amount charged for each service performed.
You can claim deductible fees only if you itemize deductions on Schedule A (Form 1040). Claim them as miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit. For more information, see Pub. 529, Miscellaneous Deductions.
Fees for tax advice. You can deduct fees for advice on federal, state, and local taxes of all types, including income, estate, gift, inheritance, and property taxes. If a fee is also for other services, you must determine and prove the expense for tax advice. The following examples show how you can meet this requirement.
The lawyer handling your divorce consults another law firm, which handles only tax matters, to get information on how the divorce will affect your taxes. You can deduct the part of the fee paid over to the second firm and separately stated on your bill, subject to the 2% limit.
The lawyer handling your divorce uses the firm’s tax department for tax matters related to your divorce. Your statement from the firm shows the part of the total fee for tax matters. This is based on the time required, the difficulty of the tax questions, and the amount of tax involved. You can deduct this part of your bill, subject to the 2% limit.
The lawyer handling your divorce also works on the tax matters. The fee for tax advice and the fee for other services are shown on the lawyer’s statement. They are based on the time spent on each service and the fees charged locally for similar services. You can deduct the fee charged for tax advice, subject to the 2% limit.
Fees for getting alimony. Because you must include alimony you receive in your gross income, you can deduct fees you pay to get or collect alimony.
When you become divorced or separated, you will usually have to file a new Form W-4 with your employer to claim your proper withholding allowances. If you receive alimony, you may have to make estimated tax payments.
If you do not pay enough tax either through withholding or by making estimated tax payments, you will have an underpayment of estimated tax and you may have to pay a penalty. If you do not pay enough tax by the due date of each payment, you may have to pay a penalty even if you are due a refund when you file your tax return.
For more information, see Pub. 505, Tax Withholding and Estimated Tax.
If you are married and your domicile (permanent legal home) is in a community property state, special rules determine your income. Some of these rules are explained in the following discussions. For more information, see Pub. 555.
Community property states. The community property states are:
- New Mexico,
- Washington, and
If your domicile is in a community property state during any part of your tax year, you may have community income. Your state law determines whether your income is separate or community income. If you and your spouse file separate returns, you must report half of any income described by state law as community income and all of your separate income, and your spouse must report the other half of any community income plus all of his or her separate income. Each of you can claim credit for half the income tax withheld from community income.
The following discussions are situations where special rules apply to community property.
Certain community income not treated as community income by one spouse. Community property laws may not apply to an item of community income that you received but did not treat as community income. You will be responsible for reporting all of it if:
- You treat the item as if only you are entitled to the income, and
- You do not notify your spouse of the nature and amount of the income by the due date for filing the return (including extensions).
Relief from liability for tax attributable to an item of community income. You are not responsible for the tax on an item of community income if all five of the following conditions exist.
- You did not file a joint return for the tax year.
- You did not include an item of community income in gross income on your separate return.
- The item of community income you did not include is one of the following.
- Wages, salaries, and other compensation your spouse (or former spouse) received for services he or she performed as an employee.
- Income your spouse (or former spouse) derived from a trade or business he or she operated as a sole proprietor.
- Your spouse’s (or former spouse’s) distributive share of partnership income.
- Income from your spouse’s (or former spouse’s) separate property (other than income described in (a), (b), or (c)). Use the appropriate community property law to determine what is separate property.
- Any other income that belongs to your spouse (or former spouse) under community property law.
- You establish that you did not know of, and had no reason to know of, that community income.
- Under all facts and circumstances, it would not be fair to include the item of community income in your gross income.
Equitable relief from liability for tax attributable to an item of community income. In order to be considered for equitable relief from liability for tax attributable to an item of community income, you must meet all of the following conditions.
- You timely filed your claim for relief.
- You and your spouse (or former staff) did not transfer assets to one another as a part of a fraudulent scheme. A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner.
- Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax.
- You did not knowingly participate in the filing of a fraudulent joint return.
- The income tax liability from which you seek relief is attributable (either in full or in part) to an item of your spouse (or former spouse) or an unpaid tax resulting from your spouse’s (or former spouse’s) income. If the liability is partially attributable to you, then relief can only be considered for the part of the liability attributable to your spouse (or former spouse). The IRS will consider granting relief regardless of whether the understated tax, deficiency, or unpaid tax is attributable (in full or in part) to you if any of the following exceptions apply.
- The item is attributable or partially attributable to you solely due to the operation of community property law. If you meet this exception, that item will be considered attributable to your spouse (or former spouse) for purposes of equitable relief.
- If the item is titled in your name, the item is presumed to be attributable to you. However, you can rebut this presumption based on the facts and circumstances.
- You did not know, and had no reason to know, that funds intended for the payment of tax were misappropriated by your spouse (or former spouse) for his or her benefit. If you meet this exception, the IRS will consider granting equitable relief although the unpaid tax may be attributable in part or in full to your item, and only to the extent the funds intended for payment were taken by your souse (or former spouse).
- You establish that you were the victim of spousal abuse or domestic violence before the return was filed, and that, as a result of the prior abuse, you did not challenge the treatment of any items on the return for fear of your spouse’s (or former spouse’s) retaliation. If you meet this exception, relief will be considered even though the understated tax or unpaid tax may be attributable in part or in full to your item.
- The item giving rise to the understated tax or deficiency is attributable to you, but you establish that your spouse’s (or former spouse’s) fraud is the reason for the erroneous item.
Spouses living apart all year. If you are married at any time during the calendar year, special rules apply for reporting certain community income. You must meet all the following conditions for these special rules to apply.
- You and your spouse lived apart all year.
- You and your spouse did not file a joint return for a tax year beginning or ending in the calendar year.
- You and/or your spouse had earned income for the calendar year that is community income.
- You and your spouse have not transferred, directly or indirectly, any of the earned income in (3) between yourselves before the end of the year. Do not take into account transfers satisfying child support obligations or transfers of very small amounts or value.
If all these conditions exist, you and your spouse must report your community income as explained in the following discussions. See also Certain community income not treated as community income by one spouse , earlier.
George and Sharon were married throughout the year but did not live together at any time during the year. Both domiciles were in a community property state. They did not file a joint return or transfer any of their earned income between themselves. During the year their incomes were as follows:
|Dividends from separate property||1,000||2,000|
|Interest from community property||500||500|
Under the community property law of their state, all the income is considered community income. (Some states treat income from separate property as separate income-check your state law.) Sharon did not take part in George’s consulting business.
Ordinarily, on their separate returns they would each report $30,500, half the total community income of $61,000 ($26,500 + $34,500). But because they meet the four conditions listed earlier under Spouses living apart all year , they must disregard community property law in reporting all their income (except the interest income) from community property. They each report on their returns only their own earnings and other income, and their share of the interest income from community property. George reports $26,500 and Sharon reports $34,500.
When the marital community ends as a result of divorce or separation, the community assets (money and property) are divided between the spouses. Each spouse is taxed on half the community income for the part of the year before the community ends. However, see Spouses living apart all year , earlier. Income received after the community ended is separate income, taxable only to the spouse to whom it belongs.
An absolute decree of divorce or annulment ends the marital community in all community property states. A decree of annulment, even though it holds that no valid marriage ever existed, usually does not nullify community property rights arising during the “marriage.” However, you should check your state law for exceptions.
A decree of legal separation or of separate maintenance may or may not end the marital community. The court issuing the decree may terminate the marital community and divide the property between the spouses.
A separation agreement may divide the community property between you and your spouse. It may provide that this property, along with future earnings and property acquired, will be separate property. This agreement may end the community.
In some states, the marital community ends when the spouses permanently separate, even if there is no formal agreement. Check your state law.
Payments that may otherwise qualify as alimony are not deductible by the payer if they are the recipient spouse’s part of community income. They are deductible by the payer as alimony and taxable to the recipient spouse only to the extent they are more than that spouse’s part of community income.
You live in a community property state. You are separated but the special rules explained earlier under Spouses living apart all year do not apply. Under a written agreement, you pay your spouse $12,000 of your $20,000 total yearly community income. Your spouse receives no other community income. Under your state law, earnings of a spouse living separately and apart from the other spouse continue as community property.
On your separate returns, each of you must report $10,000 of the total community income. In addition, your spouse must report $2,000 as alimony received. You can deduct $2,000 as alimony paid.
If you have questions about a tax issue, need help preparing your tax return, or want to download free publications, forms, or instructions, go to IRS.gov and find resources that can help you right away.
Preparing and filing your tax return. Find free options to prepare and file your return on IRS.gov or in your local community if you qualify.
- Go to IRS.gov and click on the Filing tab to see your options.
- Enter “Free File” in the search box to see whether you can use brand-name software to prepare and e-file your federal tax return for free.
- Enter “VITA” in the search box, download the free IRS2Go app, or call 1-800-906-9887 to find the nearest Volunteer Income Tax Assistance or Tax Counseling for the Elderly (TCE) location for free tax preparation.
- Enter “TCE” in the search box, download the free IRS2Go app, or call 1-888-227-7669 to find the nearest Tax Counseling for the Elderly location for free tax preparation.
The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $54,000 or less, persons with disabilities, the elderly, and limited-English-speaking taxpayers who need help preparing their own tax returns. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors.
Getting answers to your tax law questions. On IRS.gov, get answers to your tax questions anytime, anywhere.
- Go to www.irs.gov/Help-&-Resources for a variety of tools that will help you with your taxes.
- Enter “ITA” in the search box on IRS.gov for the Interactive Tax Assistant, a tool that will ask you questions on a number of tax law topics and provide answers. You can print the entire interview and the final response.
- Enter “Pub 17” in the search box on IRS.gov to get Pub. 17, Your Federal Income Tax for Individuals, which features details on tax-saving opportunities, 2015 tax changes, and thousands of interactive links to help you find answers to your questions.
- Additionally, you may be able to access tax law information in your electronic filing software.
Getting a transcript or copy of a return.
- Go to IRS.gov and click on “Get Transcript of Your Tax Records” under “Tools.“
- Call the transcript toll-free line at 1-800-908-9946.
- Mail Form 4506-T or Form 4506T-EZ (both available on IRS.gov).
Using online tools to help prepare your return. Go to IRS.gov and click on the Tools bar to use these and other self-service options.
- The Earned Income Tax Credit Assistant determines if you are eligible for the EIC.
- The Online EIN Application helps you get an employer identification number.
- The IRS Withholding Calculator estimates the amount you should have withheld from your paycheck for federal income tax purposes.
- The Electronic Filing PIN Request helps to verify your identity when you do not have your prior year AGI or prior year self-selected PIN available.
- The First Time Homebuyer Credit Account Look-up tool provides information on your repayments and account balance.
For help with the alternative minimum tax, go to IRS.gov/AMT.
Understanding identity theft issues.
- Go to www.irs.gov/uac/Identity-Protection for information and videos.
- If your SSN has been lost or stolen or you suspect you are a victim of tax-related identity theft, visit www.irs.gov/identitytheft to learn what steps you should take.
Checking on the status of a refund.
- Go to www.irs.gov/refunds.
- Download the free IRS2Go app to your smart phone and use it to check your refund status.
- Call the automated refund hotline at 1-800-829-1954.
Making a tax payment. The IRS uses the latest encryption technology so electronic payments are safe and secure. You can make electronic payments online, by phone, or from a mobile device. Paying electronically is quick, easy, and faster than mailing in a check or money order. Go to www.irs.gov/payments to make a payment using any of the following options.
- IRS Direct Pay (for individual taxpayers who have a checking or savings account).
- Debit or credit card (approved payment processors online or by phone).
- Electronic Funds Withdrawal (available during e-file).
- Electronic Federal Tax Payment System (best option for businesses; enrollment required).
- Check or money order.
IRS2Go provides access to mobile-friendly payment options like IRS Direct Pay, offering you a free, secure way to pay directly from your bank account. You can also make debit or credit card payments through an approved payment processor. Simply download IRS2Go from Google Play, the Apple App Store, or the Amazon Appstore, and make your payments anytime, anywhere.
What if I can’t pay now? Click on the “Pay Your Tax Bill” icon on IRS.gov for more information about these additional options.
- Apply for an online payment agreement to meet your tax obligation in monthly installments if you cannot pay your taxes in full today. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved.
- An offer in compromise allows you to settle your tax debt for less than the full amount you owe. Use the Offer in Compromise Pre-Qualifier to confirm your eligibility.
Getting tax information in other languages. For taxpayers whose native language is not English, we have the following resources available.
- Taxpayers can find information on IRS.gov in the following languages.
- The IRS Taxpayer Assistance Centers provide over-the-phone interpreter service in over 170 languages, and the service is available free to taxpayers.
The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service that helps taxpayers and protects taxpayer rights. Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights.
We can help you resolve problems that you can’t resolve with the IRS. And our service is free. If you qualify for our assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:
- Your problem is causing financial difficulty for you, your family, or your business,
- You face (or your business is facing) an immediate threat of adverse action, or
- You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised.
We have offices in every state, the District of Columbia, and Puerto Rico. Your local advocate’s number is in your local directory and at www.taxpayeradvocate.irs.gov. You can also call us at 1-877-777-4778.
The Taxpayer Bill of Rights describes ten basic rights that all taxpayers have when dealing with the IRS. Our Tax Toolkit at www.taxpayeradvocate.irs.gov can help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.
TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of these broad issues, please report it to us at www.irs.gov/sams.
Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. To find a clinic near you, visit www.irs.gov/litc or see IRS Publication 4134, Low Income Taxpayer Clinic List.