Important Tax Topics Your Michigan Divorce Attorney Needs to Discuss With You (Pt 1)

Divorce is a busy time, and we know you’re going to have a lot on your plate right now. Which is one of the reasons a good divorce attorney brings up those very unexciting-sounding topics, like taxes, that need to be figured out. You may want to focus on “the important stuff” like alimony and child custody (and we agree – those are VERY important!), but there are all sorts of other divorce-related topics that are equally important, because they impact your financial future in a myriad of ways. So if you’re getting divorced, and you’ve got a reputable and skilled Lansing area divorce lawyer on your team, expect to have a discussion about tax.

A statue of lady justice, wearing her blindfold and holding up scales, in front of a sign that says "Tax Consulting Office"

Tax topics you need to know about:

  • Not all spousal payments are considered alimony

For a spousal support payment made by one spouse to the other to count as alimony, those payments have to be made according to the divorce decree or separation agreement. And they have to be made in cash, not in the form of other assets, like property or belongings. Also, in order for a payment to count as alimony, those two spouses (or exes if the divorce is final) can’t live in the same home anymore, can’t file joint tax returns, and there can’t be any requirement that those payments are continued after death.

  • Once you’re divorced, your tax status will change

Your filing status on your tax return is used by the IRS to determine a number of things, including your return rate. It’s important to remember that your marital status on the very last day of the tax year will determine your tax status for the entire year. If your divorce is finalized on December 31st in Ingham, Eaton or Clinton Counties, allowing you to file your taxes with your tax status listed as “Single” or “Head of Household”, you’ll be considered by the IRS to have been divorced for that entire year.

  • Divorces can take a long time, and may not be over by tax time

As we just mentioned, your marital status on the last day of the tax year will determine your taxpayer status on your tax forms. For people in Laingsburg or Leslie involved in long, drawn-out divorces, this can mean maintaining your tax status as “married” even if you and your spouse have parted ways long before. However, the IRS does allow people several status filing options here, including filing as “Married Filing Jointly”, “Married Filing Separately”, or “Head of Household.” In most cases, listing your tax status Married Filing Jointly will result in a lower tax bill, but not everyone can work with the person they’re divorcing. In that case, your best option might be to use the ‘Head of Household’ status. 

  • If filing separately, you need to figure out your individual income

Married couples in Grand Ledge and Haslett usually file jointly, which means they combine their income and don’t have to spend any time figuring out exactly how much they earn independently. Obviously, once you get divorced and file your taxes separately, you’ll have to figure out exactly how much you earn on your own. This is important because you now have to report your individual income accurately, which can affect things like alimony and child support payments.

Make sure you have an excellent divorce attorney on your team

Join us next time for the wrap up on our list of items your divorce attorney needs to talk to you about when it comes to your taxes. Until then, if you live in Lansing, Okemos, Jackson or Dewitt, and you’re considering ending your marriage, The Kronzek Firm can help. Our highly experienced family law attorneys have been successfully representing the people of mid-Michigan during their divorces for many decades. We’re available round the clock, including evenings and weekends, at 517 866 1000. Call today to schedule your free phone or Zoom consultation.