SRR Answers “Taxing” Year-End Questions

The forensic accounting firm of Stout Risius Ross Advisors LLC has published an excellent guide to year-end tax questions that separated and divorcing spouses may have:

1.) What is my filing status for 2008? Your filing status is determined as of the last day of the calendar year. You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. Your filing status will be either single or head of household.

2.) How can I qualify to file as head of household? In general, you must meet the following requirements to file as head of household.

1. You are unmarried or “considered unmarried” on the last day of the year.

2. You paid more than half the cost of keeping up a home for the year.

3. Your home was the main home of your child for more than half the year.

4. You must be able to claim an exemption for the child. However, you meet this test if you cannot claim the exemption only because you waived the right to claim the child pursuant to your divorce decree.

3.) What if my ex and I have the child an equal amount of time?
If the child lived with each parent the same amount of time during the year, the parent with the higher adjusted gross income has the right to the head of household filing status.

4.) Who claims the exemptions for our children? In most cases, a child of divorced or separated parents will qualify as a dependent of the custodial parent under the rules for a qualifying child. However, the noncustodial parent may be able to claim the exemption for the child if the special rule (discussed next) applies. Special rule for divorced or separated parents. A child will be treated as the qualifying child or qualifying relative of his or her noncustodial parent if all of the following apply.

1. The parents: a. Are divorced or legally separated under a decree of divorce or separate maintenance, b. Are separated under a written separation agreement, or c. Lived apart at all times during the last 6 months of the year.

2. The child received over half of his or her support for the year from the parents.

3. The child is in the custody of one or both parents for more than half of the year.

4. 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 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 part of the rest of the year.

More answers are available at SRR’s website.