One silver lining of divorce? You may own Uncle Sam a little less when filing this year’s federal income taxes. Before April’s tax deadline, make sure to double-check your calculations to avoid missing out on these three often overlooked divorce-related deductions.
Medical Expenses: If you continue to pay your children’s medical bills, you may be able to include those costs in your medical expense deduction — even if your former spouse claims the child dependency exemption (or has primary child custody). In general, the IRS allows a medical expense deduction when total individual and family expenses exceed 10% of your adjusted gross income for the year. Qualifying expenses that may be calculated as part of this deduction include surgeries, dental and vision care, visits to psychologists and psychiatrists, prescription medications, travel to and from medical appointments, and appliances such as glasses, contacts, hearing aids, and other expenses not covered by health insurance.
IRA Contributions: Deposits made to a qualified IRA can reduce an individual’s adjusted gross income, which in turn, may reduce the total amount of federal tax owed. Generally, a taxpayer must have earned income from a job or self-employment to qualify to contribute to an individual retirement account. However, there’s an exception for divorced individuals who receive alimony. According to the IRS, taxable alimony you receive counts as compensation for the purposes of making IRA contributions. In 2015, assuming you’re at least 50 years old, you can contribute up to $6,500 to a traditional IRA. For example, let’s say your alimony income was $30,000 during the year, and you put $6,500 of it into an IRA. You’ll pay income tax on only $23,500 of those earnings. See IRS Tax Topic 452 for more on alimony payments.
Take Deductions for Divorce Tax Advice
Finally, payback for the all the trouble of figuring our your post-divorce taxes! Though the IRS does not allow taxpayers to deduct legal fees and court costs for getting a divorce, the IRS generally does allow individuals to deduct legal fees paid for tax advice in connection with a divorce as well as any related legal fees paid to obtain alimony (typically up to 2 percent). In addition, you may be able to deduct fees paid to appraisers, actuaries, and accountants for services related to divorce and taxes or obtaining alimony.
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