Michigan Divorce and Tax Ramification General Information
Kronzek & Cronkright Family Law Attorneys.
Michigan Divorce and its impacts on Tax Liability
A divorce in an extremely unsettling experience; from the emotional tolls it will have on you and your family, the financial burdens placed on your income during the time it takes to get the final judgment of divorce, to the tax impacts it can have in the year of the judgment and in future years, it is quite reasonable that this will be a trying and confusing time.
To offer you guidance, there are several IRS publications that relate specifically to situations where a divorce has occurred in the previous taxable year. The following publications issued by the IRS deal with Judgments of divorce and the tax ramifications/issues that may arise. The Family Law Attorneys of Kronzek & Cronkright are NOT tax attorneys, but based on their experience, the following publications may be of some assistance:
Publication 17 – Federal Income Tax
This section summarizes important tax changes that took effect in 2009. Most of these changes are discussed in more detail throughout this publication.
Publication 501 – Exemptions, Standard Deduction, and Filing Information
This publication discusses some tax rules that affect every person who may have to file a federal income tax return. It answers some basic questions: who must file; who should file; what filing status to use; how many exemptions to claim; and the amount of the standard deduction.
Publication 503 – Child and Dependent Care Expenses
This publication explains the tests you must meet to claim the credit for child and dependent care expenses. It explains how to figure and claim the credit.
You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. The credit can be up to 35% of your expenses. To qualify, you must pay these expenses so you can work or look for work.
This publication also discusses some of the employment tax rules for household employers.
Publication 504 – Divorce or Separated Individuals
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 can also 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 accounts. 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.
Publication 596 – Earned Income Credit
The earned income credit (EIC) is a tax credit for certain people who work and have earned income under a certain dollar amount. A tax credit usually means more money in your pocket. It reduces the amount of tax you owe. The EIC may also give you a refund.
Publication 929 – Tax Rules for Children and Dependents
Part 1 of this publication explains the filing requirements and other tax information for individuals who can be claimed as a dependent on another person's tax return.
Part 2 explains how to report and figure the tax on investment income of certain children (whether or not they can be claimed as dependents).
Publication 936 – Home Mortgage Interest Deduction
This publication discusses the rules for deducting home mortgage interest.
Part I contains general information on home mortgage interest, including points and mortgage insurance premiums. It also explains how to report deductible interest on your tax return.
Part II explains how your deduction for home mortgage interest may be limited. It contains Table 1, which is a worksheet you can use to figure the limit on your deduction.
Publication 962 – Earned Income Tax Credit
EITC is for people who earn less than a certain dollar amount. If you qualify, it could be worth a great deal depending on your filing status and the number of qualifying children. You could potentially pay less federal tax or even get a refund. Just imagine what you could do with that.
Publication 971 – Innocent Spouse Relief
When you file a joint income tax return, the law makes both you and your spouse responsible for the entire tax liability. This is called joint and several liability. Joint and several liability applies not only to the tax liability you show on the return but also to any additional tax liability the IRS determines to be due, even if the additional tax is due to income, deductions, or credits of your spouse or former spouse. You remain jointly and severally liable for the taxes, and the IRS still can collect from you, even if you later divorce and the divorce decree states that your former spouse will be solely responsible for the tax.
In some cases, a spouse (or former spouse) will be relieved of the tax, interest, and penalties on a joint tax return. Three types of relief are available to married persons who filed joint returns:
• Innocent spouse relief
• Separation of liability relief
• Equitable relief
Married persons who did not file joint returns, but who live in community property states, may also qualify for relief. See
This publication explains these types of relief, who may qualify for them, and how to get them.
Publication 927 – Child Tax Credit
The purpose of this publication is:
To figure the child tax credit you claim on Form 1040, line 51; Form 1040A, line 33; or Form 1040NR, line 47; and
To figure the amount of earned income you enter on line 4a of Form 8812, Additional Child Tax Credit.
This publication is intended primarily for individuals sent here by the instructions to Forms 1040, 1040A, 1040NR and 8812. Even if you were not sent here by the instructions to one of the forms, you can still choose to use this publication to figure your credit. However, most individuals can use the simpler worksheet in their tax form instructions.
This publication includes a detailed example of a taxpayer who figures the child tax credit and the additional child tax credit.
If you have recently gone through the divorce process in Michigan, you should be aware that you are entitled to various IRS tax sections that are unavailable to a large majority of yearly tax payers. It is important that you are aware of the opportunities that you may take advantage of, as well as help guide you in filing your first post-divorce tax return.
It should be noted that due to the constantly changing terrain of Tax law, you should speak with your tax preparer or accountant if you are unsure of any of the ramifications of these publications, as well as to verify that the publications are followed correctly in your tax return.
For more information regarding Divorce in the state of Michigan, contact the Michigan Divorce Attorneys today! Our phone lines are staffed 24-7, and an attorney is on call! Schedule your initial consultation today by calling (517) 886-1000.
