Post-Dissolution Tax Information
by: Low Income Taxpayer Clinic (LITC)
I just got a divorce. What is my status for filing taxes? In general, your marital status for tax filing purposes is determined on the last day of the year. If you are married on December 31, you must file as married (either jointly or separately) for that year. If you are divorced as of December 31, you must file as single (either as head of the household or not) for that year.
What is a Dependent Exemption? A dependent is a person - not you or your spouse - that you support. A dependent exemption is a tax deduction on your tax return. A tax deduction helps you pay less income tax. A tax deduction might even increase your tax refund.
Who can claim my child as a Dependent if I am divorced or separated? In order to claim a child as a dependent, you must provide over one-half of the child's total support for the year. In most cases, the parent who the child lives with for most of the year is treated as the parent who provides more than half of the child's support. Generally, if you have physical custody of your child for most of the year, you can claim the child as a dependent.
Can the Dependent Exemption be given to the other parent? Yes. The parent without physical custody (non-custodial parent) can claim the child as a dependent, but only if the following are true:
- The non-custodial parent can prove that he or she provided more than half of the child's support, AND
- The custodial parent must sign a release form giving the exemption to the other parent. This is IRS Form 8332, which you can get at: www.irs.gov. The non-custodial parent must attach this form to his or her tax return in order to claim the exemption.
You should not sign Part II of IRS Form 8332. This gives the other parent the right to claim your child in future years. Your tax situation might change. Part I of Form 8332 only gives the other parent the right to claim your child in the current year.
If I do NOT claim the dependent exemption, can I still claim the child for the Earned Income Tax Credit? Yes. Even if you do not claim a child as a dependent, you may be able to claim the child for the Earned Income Tax Credit. The dependent exemption and Earned Income Tax Credit have different rules. Generally, if the child lived with you for more than half the year, you can claim the Earned Income Tax Credit for that child. However, you cannot claim the Earned Income Tax Credit if you are filing your taxes as "Married filing separately."
Can the Earned Income Tax Credit be given to the other parent? No. The Earned Income Tax Credit can only be claimed by the parent who had physical custody of the child for most of the year. Only one person can claim the Earned Income Tax Credit for a child.
If I do NOT claim the dependent exemption, can I still get the Child Tax Credit? No. You must claim the dependent exemption to get the Child Tax Credit.
What if the IRS says I owe money from my former spouse's earnings? When you get married and sign a joint income tax return, both you and your spouse are agreeing to be responsible for any tax debt listed on the tax return. This means that you could be responsible for the entire tax debt, even if you did not earn any money that year or the debt belongs to your spouse.
Depending on your circumstances, knowledge of the tax debt, and other factors you may qualify for relief as an "Innocent Spouse." If you qualify for innocent spouse relief you may not be responsible for all or part of the joint tax debt.
Do I qualify for Innocent Spouse Relief? You may be eligible for innocent spouse relief if you signed a joint return that understated the tax due because of unreported income or incorrect deductions by your spouse. In order to be eligible for the relief you must show that you did not know about the error when you signed the joint tax return.
You may also be eligible for relief by separation of liability. With this type of relief, the IRS separates the understatement of unpaid taxes between you and your spouse.
If you do not qualify for either innocent spouse or relief by separation of liability, you may still be relieved through equitable relief if the IRS finds that it would be unfair to hold you responsible for the tax debt.
How do I request Innocent Spouse Relief? Fill out Tax Form 8857, which can be found at http://www.irs.gov. You must attach a statement explaining why you think you qualify for Innocent Spouse Relief. Include your name and Social Security number on the statement. If you are requesting Innocent Spouse Relief for more than one year, you should file one petition, but make a separate statement for each year explaining why you qualify.
When Can I File for Innocent Spouse Relief? Do not file Form 8857 with your income tax return. You should file Form 8857 as soon as you become aware of the tax debt.
Tax Information and Resources The following resources can provide you with more tax information and/or assistance with filing your taxes:
- Volunteer Income Tax Assistance (VITA): 1-800-829-1040
- I-CAN e-filing allows you to file your taxes and apply for the Earned Income Credit for free at: http://www.icanefile.org
- IRS Tax Information for Individuals: http://www.irs.gov/individuals/index.html
- MLSA Low Income Taxpayer Clinic gives low-income taxpayers free legal assistance on federal tax matters year round: (406) 543-8343 or (800) 999-4941 or (800) 666-6899 or (800) 926-3144.
Revised 5/04
The clinic listed herein is partially funded through matching grants provided by the Internal Revenue Service pursuant to the Internal Revenue Service Restructuring and Reform Act of 1998. The partial funding by the IRS does not imply that the clinics have a preferential relationship with the IRS. The decision of whether to use these clinics is your own and their use will not affect your rights before the IRS.
Call the MLSA HelpLine for legal assistance:
(800) 666-6899
Low Income Taxpayer Clinic
304 North Higgins Avenue
Missoula, Montana 59802
(406) 543-8343
(800) 686-4574
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