Divorce and Taxes: Filing Status, Alimony, and Dependency Issues

Categories: Federal Tax, IRS CE
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About Course

This course addresses the federal tax consequences of divorce and separation, an area where practitioners routinely see costly errors because the applicable rules changed substantially under the Tax Cuts and Jobs Act and because the tax treatment often diverges from what clients assume based on the terms of their divorce decree alone. Participants will examine filing status determination for separating and divorced taxpayers, the current federal tax treatment of alimony and spousal support, the custodial-parent dependency rules and their interaction with the Child Tax Credit and Earned Income Tax Credit, and the tax treatment of property transfers and retirement account divisions incident to divorce.

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What Will You Learn?

  • Determine the correct federal filing status for a taxpayer at each stage of separation and divorce
  • Apply the current federal tax treatment of alimony and distinguish it from child support and property settlements
  • Apply the custodial-parent dependency rules under IRC Section 152(e) and the effect of Form 8332
  • Distinguish which parent may claim the Child Tax Credit, the dependency claim, Head of Household status, and the Earned Income Tax Credit in a shared-custody situation
  • Apply IRC Section 1041 to property transfers incident to divorce and identify the tax treatment of a divided retirement account
  • Identify the special Section 121 home sale exclusion rules that apply to divorcing couples

Course Content

Module 1 – Filing Status Determination for Separating and Divorced Taxpayers
Marital status as of December 31; married filing jointly versus married filing separately; the considered-unmarried test for Head of Household eligibility; community property state considerations.

  • Filing Status Determination for Separating and Divorced Taxpayers

Module 2 – Alimony and Spousal Support Under Current Law
The Tax Cuts and Jobs Act's elimination of the alimony deduction and inclusion for post-2018 agreements; treatment of pre-2019 agreements and modifications; distinguishing alimony from child support and property division.

Module 3 – Dependency, the Child Tax Credit, and the Custodial Parent Rules
The custodial parent test under IRC Section 152(e); Form 8332 release of claim to exemption; the tie-breaker rules; which credits follow the custodial parent regardless of Form 8332.

Module 4 – Property Transfers, Retirement Accounts, and the Marital Home
IRC Section 1041 tax-free transfers incident to divorce; Qualified Domestic Relations Orders and retirement account division; the Section 121 home sale exclusion rules specific to divorcing couples.

Final Assessment – Divorce and Taxes: Filing Status, Alimony, and Dependency Issues
Complete the following final examination. A passing score of 70% (7 out of 10) is required to receive CE credit.

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