How Divorce Affects Your Tax Situation and Back Tax Liabilities

Divorce can be devastating – not just emotionally but also financially and in other ways. It can feel like your whole life is ending. You might lose friends, you might face significant changes in your career or housing situation, and you might grieve the loss of what you thought would be your last relationship. On top of all that, you’ll certainly be dealing with some big financial changes, including how much you have available and an increase in your expenses.

Tax situation on divorce

Your taxes can also change. You might end up in a different tax bracket, and you might not have the same deductions to claim. You might also face some complicated situations if you owed taxes while you were married but those debts weren’t paid off by the time your divorce is Phoenix is final. It’s important that you talk with an AZ tax lawyer in addition to a divorce attorney so that you understand your rights and obligations.

Here’s a quick overview of how your divorce might affect your tax situation or your back tax liabilities:

Fraud Liability

tax reportWhen you announce your intention to divorce – or your spouse does – your spouse may seem to turn into a different person. Your spouse may become downright hateful and spiteful, seemingly in complete opposition to you. You may not even know all the ways in which your spouse starts acting against you, such as hiding money, moving assets, or making underhanded moves to cheat you out of certain marital property. Your spouse may go so far as to break the law when trying to protect his or her own slice of the pie when it comes to your marital assets.

If your spouse fails to disclose income and doesn’t pay taxes on such income, you could still end up being liable for those taxes. A good tax attorney can help you understand your liability and potentially help you get innocent spouse relief. Qualifying for innocent spouse relief requires that you meet specific criteria, and the specific proof is required, so it’s important that you have an experienced tax lawyer to help you get it.

Back Tax Liability

The IRS can audit your previous tax returns at any time as long as the statute of limitations is open. It may be years after your divorce, and you may get a notice saying that you are being audited. If the IRS finds that you actually owe money on an old return, you will still be on the hook for that amount with your former spouse. Those debts don’t evaporate with the marriage as you have joint and several liabilities with a jointly filed return.

A tax attorney in Arizona can represent you during the audit to help find additional deductions or tax savings. If your spouse did something to cause the debt without your knowledge, you may be able to get innocent spouse relief. Your tax lawyer can help you understand your options.

Alimony Deductions

money situationIf you are paying alimony on a divorce finalized before the end of 2018, you can deduct that as an expense from your income. If you are receiving alimony from a divorce finalized before the end of the year, you will have to report that money as income and pay taxes on it. But that will all soon change. Changes in the Tax Cuts and Jobs Act will eliminate those requirements, meaning that paying the alimony will not be deductible and receiving the alimony will not be taxable. You can always file to modify the amount supported.

Again, it’s important to always talk with a tax attorney who understands up-to-the-minute changes and how they will affect your situation personally.

Changes to Tax Filing and Processing

If you are changing your name after your divorce, the processing of your tax return may also be slightly delayed. The name has to match what’s on your Social Security card, so make sure you apply for a new number and card as soon as possible if you know you will be changing your name.

There are many other ways that your divorce may affect your tax liability, so you need to talk with an AZ tax attorney to make sure you are meeting your obligations and are aware of your rights. There are plenty of professional Attorneys that can help you with your tax changes after a divorce. Each of our tax lawyers has experience working for the IRS, so they have intimate knowledge of the tax code and how divorce can change your obligations. They can represent you in tax audits, collections, and appeals, and they can help you with issues like foreign tax reporting or innocent spouse relief. Contact us in Arizona to talk with a tax attorney and find out your legal rights.

If you have any doubts about your pending divorce, child support & custody, or other Family Legal Matters, don’t hesitate to call us and we will help you on each and every step of the way. A skilled family law attorney in Arizona is going to help you create a parenting plan that is going to work for your life and your family.  Plus, in the event the plan stops working, they will be able to help you make the needed changes.  Contact us at My Arizona Lawyers, PLLC for a free consultation.  (480) 833-8000.  

Mesa Location:

1731 West Baseline Rd., Suite #100
Mesa, AZ 85202

Office: (480) 448-9800

Glendale Location:

20325 N 51st Avenue Suite #134, Building 5
Glendale, AZ 85308

Office: (480) 509-0955

Tucson Location:

2 East Congress St., Suite #900-6A
Tucson, AZ 85701

Office: (520) 441-1450

Avondale Location:

12725 W. Indian School Rd., Ste E,
#101Avondale, AZ 85392
Office: (623) 469-6603


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My AZ Family Law Lawyers
1731 W. Baseline Road, #100
Mesa, AZ 85202
Hours: Mon – Fri: 9 am – 5 pm
Phone: 480-833-8000